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m-Commerce

September 16, 2013

John Naughton
in his recent column for The Observer, wrote that in 2006 or thereabouts, a
phrase that data was the new oil came
into public consciousness. At the time I was sitting on the board of a company
specialising in large scale social data analytics (in those days mobile
networks were large scale social networks), And I liked to use the term raw data has no value but refined data is
the black gold of the 21st Century. My thoughts were that better
information created at the size of bytes could deliver better.

Commercial
models could evolve and made more effective and efficient, transformed even, by
raw data becoming refined data. But there was the potential for much greater
things, significant improvements if not transformation in healthcare,
education, agriculture, finance, that could deliver so much to us as a society.

The argument for an open model: my argument was that if data was shared, in an open
context; open data, open society, open api's we could all benefit. For example,
MIT shares its entire curriculum under a creative commons license. Openness is
resilience, the default setting not only of what we call nature but our entire
cosmology works because of its connectedness and diversity.

The darker side of data: of course this
is all true, but the recent developments and revelations from Bradley Manning,
Edward Snowden, and Wikileaks is that governments are hoovering up of vast
amounts of data, and breaking their own constitutions, it seems, in the
process. Whilst we do not know a thing about it. In the same way corporations
are behaving in exactly the same way.

The key question about any major technological
development is: who benefits? The answer in the case of big data is: huge
corporations – the Googles, Amazons and Facebooks of this world, which are the
only outfits (outside of the US National Security Agency) with the
computational resources to mine, analyse and process the data torrents unleashed
by us as we go about our networked lives. The companies don't talk about it
this way, of course. Instead they have soothing patter about how their
analytical capabilities enable them to serve you better: how the ability to
analyse the web searches conducted by you and your friends enables them to
provide better search results, for example; or how analysis of your online
behaviour enables Amazon to suggest products that you might like; and so on.

All true, of course, but skilfully avoiding the
awkward fact that you are the resource that is being mined and that the playing
field that is cyberspace is tilted in favour of the corporations who have come
to dominate it.

We, Naughton
observes are the wells.

Data, power, privacy, democracy: Naughtons view is dark and dystopian a bit like J.G.
Ballard and I don't blame him. After giving a presentation to a technology audience earlier
this year, in which I explored the potential of data combined with networked
mobile communication technologies to deliver better healthcare, civic
infrastructures, education etc., I explored how a city becomes more efficient
through large scale data monitoring – then I became deeply concerned, because,
if Rio De Janeiro, or Paris, or wherever has all its utilities managed at an
atomic level via data and that is run by a private company (IBM), then the
question I asked was, has the city lost its sovereignty?

My unease is
that corporations are first and foremost responsible to their shareholders and
the stockmarket, not to civic duty. And of course this presentation dovetailed
with the breaking news of Edward Snowden, and the trial of Bradley Manning.
Data, control, coercion, power, and privacy. They all intertwine, democracy in
essence is the concept of an open world and that is what I think many fear - we
have turned away from the well of democracy to suck at the well of data for
darker purposes. And it is darker as there is no consultation of the public
realm, no communication of why, purpose and legal remit. We simply must, says
the state, be saved from ourselves. Therein lies the catch 22, data is
information, nature runs on information freely shared, we call it diversity,
the universe is an open eco-system that is perhaps the greater giver of life,
taking that idea further communications is also all about power, who has it,
who controls it, and ultimately who wields it.

A story about
power: Manuel Castells has written extensively on this particular issue in his
book Communication Power. And that is the point John
Naughton and Slavoj Žižek make on communications, privacy,
democracy Perhaps even the potential of our democracies to progress in their
current state. For me the bigger picture is that, the more we remove openness
from the public realm, the more we monitor because we are fearful of 'the
others', the more we attempt to extract rather that regenerate - we are not in
a good place. I still believe that data used in the right way can deliver
extraordinary benefits to everyday lives in a multiplicity of ways. I worry
that since 911 however, our fear of 'the others', has driven us away from
working out why our world feels more unsafe, and our response of 'control at
all costs', inadequate, because it does not solve the problem. And I also worry
that the pursuit of financial gain at all costs (growth for growth sakes is the
MO of a cancer cell) also erodes our society. So the point is then to offer an
alternative positive view of what next might look like. Because if we cant
describe a new destination, we will never be able to get there.

May 31, 2013

I am regularly frustrated by the unwarranted hype and
excitement around 'location' in mobile. The frustration comes from the fact
that this issue has been studied ad nauseum and yet newcomers to mobile manage
to reinvent the same tired ideas and peddle them as if they would shortly
change the world. They won't. I have been writing the same article about why
location is not the big opportunity in mobile for more than a decade now, and
its time to do that again. Its not that location cannot give 'any' gains or
benefits, there are some. But how to understand location's relevance, I think I
now have the right metaphor. To use location in mobile services is similar to
putting speedbumps for cars on the highway.

THE NUMBERS ARE NOT THERE

Location-based services (LBS) including LBS-based ads were
launched in year 2000, so they are about 13 years of age. First LBS services included the apartment-hunter from Finland, the shopping mall LBS push ads from the USA and the LBS maps from Japan. The mobile data
based media industry was invented only two years earlier, in 1998 when the
first downloadable paid content for mobile was introduced. That was the ringing
tone in Finland by Saunalahti (later Jippii, now part of Elisa). By year 2009
(12 years from launch), basic ringing tones were worth 5 Billion dollars
according to Juniper Research. For context, the very basic ringing tones
outsold global iTunes music by approximiately 2 to 1 that year.

Now lets look at location-based services. LBS based advertising was launched in
year 2000. By 2012 total global LBS advertising services were worth 685 million
dollars worldwide (ie 526 million Euros according to Berg Insight). So over a
similar 12 year period, one service became 5 Billion dollars in value, the
other only under 700 million in value. Basic, monophonic 'ploink-ploink'
ringing tones managed to grow 7 times bigger than location-based
advertisements.

So, lets be clear. Location-based advertising CAN grow. It HAS grown. But the
average growth rate of non-messaging based mobile data (mobile media) is about
50% at an annual growth rate for the past five years. LBS is growing at perhaps
10% or 20% per year. It is THE worst-performing sector in all of mobile. If you
do ringback tones. If you do MMS. If you do social networking. If you do music
downloads. If you do coupons. If you do alerts. If you do augmented reality.
Anything else in mobile grows more strongly than location-based services.

RISING TIDE RAISES ALL BOATS

Mobile has set the world record for fastest-ever growth from zero income to 1
Trillion dollars in annual value, achieved in only 29 years from the first
commercial cellular mobile (car-phone) call in Tokyo Japan on NTT's network in
1979 (four years before the more famous Motorola phone was sold in Chicago by
Ameritech). And 29 years later, the mobile industry breached 1 Trillion dollars
in annual revenues (currently 1.4 Trillion). Note first, that many big
industries we know well, like music, movies, gaming, radio, television,
computers and the internet - have never grown this big. So yeah, mobile is far
bigger than those industries. And that no Trillion-dollar sized industry has
achieved it this fast, in only 29 years. So mobile has set the record, and is
currently still, the strongest-growing giant industry on the planet.

Anything you do in mobile should grow. The point is, if you are not growing at
the rate of the industry, you are underperforming! And LBS is consistently,
chronically, dramatically underperforming. So yes, you can give me a stat of
growth or of revenues. It may seem impressive by itself. But immediately when
we compare it to any other forms of mobile data services, location-based
services are exposed as pathetically bad.

Take advertising. The first mobile ad was served in 2000. It was an ad running
on SMS text messaging, to fund the free headline news service on SMS (launched
in Finland by MTV3 the television broadcaster). How did SMS text messaging
based advertising do? eMarketer reported in 2009 that SMS text messaging based
mobile advertising was worth 6.4 Billion dollars. Yes, you can do ads with LBS,
in 12 years reaching a paltry 685 million, or you could do 9 times better in
one quarter less the time, using SMS advertising. You see what I mean. A rising
tide raises every boat. Even the worst, leaking, barely afloat boat will be
raised by a rising tide. But you should not aim for the worst part of this
industry, aim for strongest-growing parts.

LBS SPEED BUMP

So I think I have come up with a good analogy. LBS is like a speed bump in
road-construction. Most of the time if you build a highway (to allow cars to
drive fast from one town to another) you don't want speed bumps on it. Like
cars, with mobile, most users will want the speed, they don't want to be slowed
down. That doesn't mean there is 'no use' for speed bumps. We use speed bumps
for example to slow cars down near schools, or other ways to slow down traffic,
if for example there is road construction on our highway. In specialized cases,
like race cars, some racing circuits insert 'slow-down zones' in terms of
chicanes and hairpin turns, so that the race car drivers have more challenges,
more opportunities to make mistakes and for good drivers to be able to pass
lesser drivers, like they often do at Formula 1 race circuits, when the
organizers notice that the cars are getting too fast for that circuit.

Yes, we can find specialized uses of speed bumps, but in most cases, most
cases, they are a nuisance. Similarly LBS. If you give me a case example of any
mass-market success of LBS, the success can be attributed to some other aspect,
not the location. So LBS coupons? Yes. The gimmick here is coupon. You'll find
that mobile coupons of almost any variety are growing at break-neck speed. You
don't need 'location' to do successful coupons. Or the gamification of becoming
the Mayor of Starbucks, via FourSquare. This is a game. Games are huge growth -
just look at Angry Birds. Games are big, even location-based games can succeed
(but at lesser rates than most popular mobile games that do not use the speed
bumps of location). Or take Augmented Reality. Yes, plenty of AR is done with
location information, but its by no means the only way to do AR. The powerful
agent here is AR, not location.

PARCEL DELIVERY

So, lets take a perfect example. Parcel delivery. UPS has already launched the
service that smartphone users can re-direct their package deliveries to where
they are physically, at the time of delivery. So if you are not at home,
because you are stuck at the office working late, or there was an emergency and
you had to take one of your children to the hospital, etc, you can have the
parcel delivered to where you are, not the original delivery address that was
entered when the package was sent a few days ago. Brilliant, consumer-oriented
service. And I think I saw a TV ad of FedEx doing something similar when I was
in Toronto just now (only caught the end of the ad). This is a 'perfect' case
of LBS. Obviously, parcels are physical items, and are delivered to a physical
location. Isn't this a perfect location-based service?

No! No no no no no. Location is the speed bump again. Yes, its possible that I
am at the intended location when the 'querie' is made as to where to deliver
the parcel. Yes, its possible to use the GPS positioning on my smartphone to
tell UPS or FedEx please deliver the parcel 'here' (wherever that may be, my
home, my office, any other place). But its equally possible, that I am NOT
where I want the parcel delivered!!! The power of mobile is to go beyond
location! I could redirect that UPS package to where I am not now - I am now at
home, but heading to the hospital, so 30 minutes later, I'd prefer the parcel
delivered to the lobby at the hospital, not to my home. Or better yet, mobile
can transcend location. I could re-direct the parcel to my sister's house on
the same street, knowing she is at home. My smartphone cannot pinpoint my
sister's location based on my phone's GPS sensor. But I can easily give the
direction via an SMS or map, or simple mobile web address box, and type in my
sister's house number on the same street. Why would you want to limit your
'service' to an explicit location, when mobile goes beyond location, to
'movement'. I can be freed from location, with mobile. Location is an
artificial fence, an artificial jail for consumers. Mobile has the power to
free us from borders and limits and locations!

And again, this may seem radically 'new' and bizarre to you,
if you are relatively new to mobile, such as you discovered the mobile industry
only in the iPhone era (year 2007 or after that). We have known. J-Navi, the
location-based mapping and guidance service of J Phone in Japan (now Softbank)
reported in 2001 that 30% of their map request by mobile phone users came for
map information about some other location than where the phone was physically
at !!! Guys, I am not inventing some new radical thought here! We've known this
for more than a decade (those of us who bother to study this industry, not just
spew some baseless drivel)

USE THE 9 UNIQUE ABILITIES

This is so frustrating to me. I know exactly where it comes from. It comes from
the technology-geeks who look at the GPS sensor, see the personal location on a
map, here is where I am. And next they think, hey, I could serve coupons and
offers to the person near the store. This is so stupid. Mobile has 9 unique
abilities that offer us the chance to deliver magical experiences, something
never before possible on any tech including laptops and the legacy internet.
Location is not one of the 9 unique abilities of mobile. Location existed in
the third mass media - cinema. We can do location-based ads shown at the cinema
'after the movie if you want to have a nice dinner, come to Tony's Italian
Restaurant two blocks from this cinema'. - these kinds of ads used to be very
common back in the earlier days of movie advertising. And how supremely
successful are they? Yeah. As trivial to cinema advertising as any LBS ad
examples are to the overall mobile ad market. If Location-based ads were so hot
and successful, we'd today see massive LBS ad market powering cinema and
dwarfing television ads.

3 - Mobile is permanently connected
(these two are not the same, you can permanently carry a device that is not always
connected - your wristwatch for example, and you can have a permanently
connected device that is not always carried - like your home broadband internet
connection)
4 - Mobile has a built-in payment system (note this includes both making
payments and mobile can be a terminal for receiving payments)

5 - Mobile measures the audience most accurately

6 - Mobile is available at the point of inspiration

7 - Mobile captures the social context of consumption (ie
our viral forwarding, our likes and follows, recommendations, which does not
require purchase - I can recommend something even if I didn't buy it)

8 - Mobile enables Augmented Reality

9 - Mobile offers a digital interface to the real world

These nine abilities are the way to build successful mobile services. Location
is not one of the unique abilities. Location is not even a 'useful' addition
for most services. In many cases where location is used, the service could be
better if location was abandoned, and in most cases where location is
collected, the service would not suffer in any meaningful or measurable way, if
location-collection was abandoned.

NICHE ONLY

Yes, there are niche uses where location is very important. The Blackberry
Pocket Cop app, for example, allowing policemen to use Blackberries at work. It
has all kinds of secure police uses including obviously secret messaging if the
policeman is in a dangerous situation and cannot talk but needs to communicate.
But yes, it also has the location-positioning of the police officer. This is
very important if the police officer needs help, because he will not
necessarily know the exact name of the street or cross-street or street number
etc. But a location pin-pointing of his position can truly be life-saving
feature, in a highly dangerous city like say Baltimore (one of the first where
Pocket Cop was launched).

If you find yourself lost, then location-based accurate positioning is very
useful. Yes, if you are driving your car in unfamiliar places, and find
yourself lost - yes, an accurate positioning of your map is very useful. So
specialized drivers - taxi drivers for example, who always drive to different
places - will benefit from LBS based guidance on their car navigation systems.
What about you and me? Did your office secretly shift to a new address last
night? Did your children's school suddenly escape to another town? Did your
home re-position to another suburb today while you were at work? No. Most of us
do not find ourselves in unfamiliar places daily, weekly or even monthly. Once
or twice per year we might go on vacation to an unfamiliar location. A few
times we might venture to a strange part of town to some visit etc. But unless
you are a jetsetting global James Bond, mostly we do not need the daily
guidance in strange cities every day.

And if you set up a treasure-hunt type of game, like the
rapper Jay Z's autobiography (released as a traditional printed book) where
there were clues on every page for 300 treasure-hunt type of missions for fans
to discover out of New York City, then yes. Locatino can make a difference. But
thats about it.

SO LO NONSENSE

So we get SoLoMo, Social is great. Mobile is treat. But Location is sheer
rubbish idea. If location was so powerful as a driver of commerce for example,
why would retail worry about mobile. Traditional bricks-and-mortar stores are
ultimately location-based. They say its all about 'location, location,
location' in retail. Why would they worry about shoppers with mobile? Because
mobile releases us from the binds of location! Because mobile frees us from
location. Because mobile liberates us from the chains of location. Imagine
being superman, able to fly, and then being chained to the earth. Thats what
you get, if you force location to something that is mobile. You shackle it down
like a prisoner.

Location only limits your business opportunity, it does not expand it. Take
your location-based promotions. Say you are a florist and find yourself with
sudden overstock of inventory of flowers. Flowers that don't last long. Someone
had a wedding, but cancelled. You now have tons of flowers to sell. So you
could blast the neighborhood with flower offers, get 12 roses for the price of
6, that kind of thing. And if you did use location-based ads, for example
blasted to all within walking distance, no doubt you'll get some business out
of it.

Here's the point. If you did the same ad - without the location-limitation -
you'd get more sales. So why only limit sales to those who happen to be near
you (but are not necessarily needing flowers). You annoy lots of people, to get
some business. But why not rather have opt-in database for clients who shop
with you? Now you can send the offer to all who already like your store, who
have shopped with you before - and some happy Romeo can take his car, drive to
your store, from quite far away, to buy say two dozen roses for the price of
one dozen, to surprise his Juliet.

Location limits your reach. So its not just those within driving distance to
your store. What about the James Bondian world traveller. He who has a nice
secretary, his 'Moneypenny' back at the office. If he gets the alert while on a
business trip to Germany, he could buy a bunch of roses, pay by credit card,
and have them delivered as a spontaneous gift to the hard-working secretary
back at the office. Location only limits your opportunity. Its like a speed
bump on the highway. For most mobile services, location reduces your
opportunity.

ORCA VS NARWHAL

I wrote at length about how the Romney vs Obama campaigns used data-mining.
Romney did it the old-fashioned way, by zip codes, voting districts. His method
was akin to location-based marketing. This voting district has a high
proportion of Republican supporters, lets direct 'get-out-the-vote' type of
activities like phone calls and reminders to that area.

Then there was Obama's campaign which yes, did of course know what district you
were in, but its targeting was based not on location, but rather, on two scores
of actual human behavior - the voter's preference ie supporter of Obama or
supporter of Romney (individual voters identified and targeted this way) and
get this - also each voter's likelihood to vote. So if you are a strong
supporter of Obama (and have not voted yet on election day), you won't need the
encouragement to vote. If you are very likely to vote that day (but have not
yet voted) its no cause for concern at Obama headquarters, because they know
you will (and any get-out-the-vote efforts would be wasted, because you would
vote for Obama anyway). But the targets were the lukewarm supporters of Obama
who were not sure if they would vote that day. Those types of voters would get
calls and SMS reminders, even other Obama supporters would call them directly
(as volunteers) with a nurse calling a nurse, a teacher calling a teacher, a
military vet calling a military vet etc. This is the far FAR more powerful way
to use (mobile) technology to achieve your ends.

Yes, Romney's campaign with location, could do something that was better than
nothing. But what Obama did, with targeting, actual voter insights, and focused
efforts (all to an opt-in database where voters had given permission to send
messages from the campaign etc) gave Obama at least 3.5 million more votes than
what he would have gotten if Team Obama had used traditional zip code/postal code/voting
district type of - location-based - voter activation methods.

COUNTER-PRODUCTIVE

Mobile allows our service to be freed from tethering. Freed from the cable.
Freed from the socket. Freed from proximity. Freed from short-range wireless
even. Freed totally from location. Location-positioning is the very antithesis
of what mobile can do. Its like building an airplane, then cutting off its
wings. I am reminded of Gary Schwartz's excellent observation in his new book
about use of mobile tech in retail: Fast Shopper, Slow Store. Gary explains why
tablets are only ultra-portable digital devices, not as powerful as mobile
phones and smartphones. Because mobile phones and smartphones can be operated
single-handedly,.while doing other tasks. Tablets, on the other hand, in Gary's
words 'immobilize consumers'. The tablet is very portable yes. But the moment
you pull it out of your bag, and start to use the tablet, it will immobilize
you. You want to be seated, you need to use both hands. Its very difficult to
use a tablet while walking, and almost impossible to use it single handed. Most
of the time with tablets, once we start to use them, we stop. We stop moving.
We become immobilized. A tablet to mobility is like Kryptonite to Superman. The
superpowers were there, but are now gone.

So, when you see millions (and even Billions) headed to some new start-ups and
ventures that seek to revolutionize mobile through location, be warned. Tomi
told you so, Tomi said years ago, that is not going to be big business. Be very
careful and monitor the space.

If you see forecasts of huge growth projected for location, don't fall for the
same trick! We had the exact same forecasts years and years ago. It never came.
Don't be fooled by some clueless analyst promising a massive future. Look at
his starting point data. What does the analyst say location is worth today. How
many users today. How much revenue today. It is pitifully little. Then wait and
see. If I am wrong, and suddenly after more than a decade of failure, location
somehow does break free, then we must see real user and revenue numbers that
are big. Revenues in the many Billions. Else, be smart. If the numbers are not
there, learn the lesson, and put your money, your time, your project resources
into any other part of mobile, where it will give you better returns than it
would in location.

And please please please do not write that 'now' is somehow different. No, GPS
on iPhones today in America is no different from GPS on early KDDI phones in
Japan in 2002. Yes, Japan had GPS based location services a decade ago. Don't
say maps make a difference or 3D rendering of cities. Japan had all that by the
middle of the last decade, yet KDDI itself - who essentially invented and
launched almost all modern LBS concepts from LBS-based ads to LBS-based
treasure hunts to LBS-based maps - say that of their whole service portfolio,
LBS is the worst-performing part.

Context is good. Context is useful. Context can include elements like time, and
the users 'status' of being at work or at home. Context can have dozens of
elements that can help us identify and target services to help our consumers.
And within the area of Context, location can be used as one element (distinct
from say, proximity). Location can be used as an input to derive other benefits
such as movement. We can measure speeds of traffic based on the measured
positions of individual phones on a highway, and measured over a few minutes of
time. Across many phones (as those inside cars moving on that road) we can
calculate very accurately the average speeds sustained on that road, to
determine for example if there is road congestion this morning, etc.
Context-based services I can see becoming big over time. And location may be
one of dozens of inputs. But don't plan on launching location-based services
for the masses. They never turn out big.

May 20, 2013

So yeah, I had the honor of speaking twice at this year's MMA Forum event in New York City. And as the conference hotel was the Marriott Marquis, right on Broadway, I can say that I've 'done Broadway' haha...

But apart from my presentations - you may enjoy 'Around the World in 80 Slides' about the status of mobile marketing outside of the USA (the slideshare presentation has had over 6,000 views, wow, in just over one week!). Lets talk about what else happened at the MMA Forum. Here is my update of the latest thinking from many of the best marketing and advertising minds of Madison Avenue, and how they now see mAd as in Mobile Advertising, and the more broad term, Mobile Marketing, in the context of other modern marketing tools and methods. The mAd industry is maturing nicely. I was very VERY impressed with what all is being discovered, discussed and disseminated.

This blog is a collection of my notes from the MMA Forum. As the event ran mostly on three threads, I could not obviously attend all presentations, so please take this not as a comprehensive review but rather a sampling of what we learned. And in no particular order, lets see what brands were saying what about mobile.

MACY'S DEPARTMENT STORE

Jennifer Kasper, the VP of Digital at Macy's, yes the world's largest department store, gave a keynote to the MMA Forum. She said that if Disney can turn from an entertainment company into a retailer, why can't Macy's turn from a retailer into an entertainment company. And she pointed out that in New York City, the Macy's Thanksgiving Parade is truly an institution, one that is covered nationally on TV. Jennifer made a wonderful observation about mobile phones in the stores: before we consumers were being yelled at for using our phones in the stores, now we are being encouraged to use them. And as to mobile marketing, how about this innovation - we all know that TV shows can be interactive via SMS, like American Idol and Eurovision etc, what about TV ads? Macy's has introduced TV ads that invite TV viewers to respond live, and even make purchases straight off the live TV advertisement.

ANNHEUSER-BUSCH INBEV

We had the privilege of hearing Winston Wang give a keynote too. And boy, was that packed with all the right things to say, and just about everything you ever wanted to know about mobile when used in marketing. Winston was like a rapid-fire quote machine. My notes about his keynote ran 20 separate items and honestly, I could write a long blog just about what all he said, and the insights his comments reveal and contain. Also, as already wrote on Twitter when Winston was speaking, I could use a Winston Wang beer quotation at the end of just about every slide I show about mobile marketing, haha, they were all totally the right message and totally up-to-date and so comprehensive they truly covered the whole moblie marketing spectrum. But let me try to summarize it to a few of the best lines and examples.

To start with, a lovely beer quote: Physical social is beer, digital social is mobile; innovation opportunity lies in the middle. Winston also said everyone's attention is going to mobile. Mobile will connect marketing and sales. Mobile is measurable like nothing else before. Mobile amplifies events. Mobile is not just B2C, its C2C (Tomi comment: Cool !!! truly in the spirit of Communities Dominate Brands the book and the origins of this blog). And get this, Winston ended his presentation advising the audience to use 'Tomi Ahonen's 9 unique aspects of mobile' to create winning mobile concepts. Thanks Winston! The beers are on me!

But I'm not done with Winston Wang. Those were selected pearls of his many quotes. What is Annheuser-Busch Inbev, the world's largest beer brewery doing in mobile? Well, as Winston is their Director of Innovation, you can guess its plenty, across all their brands. Like Stella Artois, which has an advergame about pouring the beer correctly (using the sensors of the smartphone). This game is also a virtual tutor/mentor to train the proper speed to pour Stella Artois (which is obviously VERY slow and STEADY to ge the right head on the beer). They have an AR app to find the nearest bars and pubs that serve Stella Artois.

Or how about the Bud Light Sports Fan beer app. It is designed for second screen use (ie simultaneously while watching a live sports game on the TV ie first screen, you pull up the Bud Light Sports Fan on your smartphone or tablet for your second screen experience as you watch the live game). The app poses relevant questions about the live game for fans to react to, giving away prizes for the best answer or best guess. Some questions ask for predictions of game results and game events for that live game. Other questions are trivia about that sport and the teams involved etc. Very engaging.

HOME DEPOT

Yet another brilliant presentation was by Trish Mueller the Chief Marketing Officer of Home Depot, the world's largest tool (and garden furniture) retailer. She gave tons of examples and said that whereas a real bricks-and-mortar superstore of Home Depot can only stock 35,000 items to sell, the mobile phone has an 'endless aisle' and they currently stock 400,000 items for sale on the phone screen. Home Depot has found that more searches already come from mobile phones than traditional PC based internet.

The Home Depot shopping app has several brlliant ideas, including an on-screen measurement tool for measuring bolt sizes, to an Augmented Reality furniture virtual tester, using the cameraphone to place garden furniture into your yard or balcony, to see how it looks and fits. Their app includes the 'talk to the hand' option where shoppers can talk directly to Home Depot advisors rather than sending questions. The Home Depot app has been downloaded 3.5 million times

UPS

UPS the package delivery company has deployed a solution to let consumers decide where the final delivery of the package will take place. They want to deliver only once, to the best address. So if you will be home, thats fine. If you prefer the package delivered to your office, thats fine. If you're at the hospital today because your child is suddenly ill, have the package delivered to the hospital reception, etc... It saves UPS tons of money from not having to make unncessary delivery attempts.

STATS STATS STATS

And we heard a ton of new stats. Many were familiar to my readers and/or nicely quoted my stats, from the 'more mobile phones than toothbrushes' to the 150 times per day stat. But here were new stats for us to now quote in our presentations and articles about mobile marketing:

Time Inc: People check news on their phones 40x per day

MMA: 91% of mobile phone users have their phones 24 hours a day, 7 days a week (ie also sleep with the phones)

The Weather Channel: most mobile users of their service spend more than 1 hour per week on weather news

AT&T: 88% of US consumers watch the 2nd screen (mobile) while watching TV

MMA: 43% of Americans use mobile as their primary search tool

Nielsen: USA has 89 million mobile shoppers

Rovio: Angry Birds has passed 1.7 Billion cumulative downloads

Millenial Media: There are now more mobile phone connections than humans alive

Mondelez: Mobile increases impulse buys inside shops by 18%

MMA: 49% of US consumers have changed their purchase decision inside a store because of mobile

Google: 8 in 10 smartphone shoppers use their phone in the store to help them shop

3Seventy - Brands see a 25 dollar return for every 1 dollar spent on SMS

MMA: Mobile coupons get 10x better redemption rates than eCoupons

MORE MOBILE FIRST COMPANIES

We heard several more companies embracing 'Mobile first' for their digital strategy (ie design for the small screen first, before designing for the old-fashioned PC based legacy internet). Home Depot said they are a mobile first company. JP Morgan Chase bank said you have to have a mobile first strategy. Starbucks says nothing is more important than mobile. Rovio said Angry Birds would not have been possible had Rovio not been a mobile first company. (and its nice to see my thinking from my 2002 book m-Profits now embraced so widely by such a diverse range of giant companies, as the right way forward..)

QUOTES

There were so many good quotes that came from the event. Here is a sampling of my faves:

Geo-fencing is so 2012 - Saatchi's Media Director, Gabriel Chang

Phones have taken the place of the cigarette break - Google Head of Mobile and Social Tim Reis

Mobile is augmented humanity - Google Head of Mobile and Social Tim Reis

Shoppers who use mobile more, buy more - Google Head of Mobile and Social Tim Reis

This event heard the mantra that the best way to reach your whole audience is SMS text messaging. We had continuously SMS examples and stats (most very familiar to those who follow my writings) but this was very refreshing to me, as in the past there was plenty of the misguided view that one should do a smartphone app for example, rather than use SMS. Now it was a near-unanimous view by all speakers that anyone in the audience had to do SMS first.

And many then also mentioned that the next thing to do after SMS, was MMS. Like Gary Schwartz the author said at the event, if you include purchase uption to a marketing SMS, your response rates shoot up 3-fold. But if you use MMS and include purchase option, compared to basic SMS informational/advertising/branding messages, MMS will get you a 6-fold increase in response rates. Like I say, MMS is the ultimate wet dream for anyone in marketing and advertising, its everything you ever wanted SMS to be, if you are in advertising, marketing or media. No, MMS is not the perfect picture-sharing method for consumer-to-consumer communications (although we can use it for that as well). But MMS is indeed the ultimate brand messaging tool for their marketing communications, and increasingly the MMA Forum speakers held this view too. Very nice to hear.

PIZZA BUTTON

Finally a truly brilliant idea from Dubai. Red Tomato Pizza has deployed a very simple fridge magnet, that includes a GSM chip and data connection to their pizza ordering system. Your fridge magnet looks like a pizza slice, and lets you configure your pizza exactly as you like it, pepperoni or tutti-di-mare or vegetable or extra cheese etc, and when you're ready? Just press the button. Your pizza is delivered in 30 minutes to your door. Just press the button. Gotta love it!

Thats my quick view to the best MMA event yet. If you see an MMA event near your neighborhood, come there and meet the industry leaders and learn about the best ideas in this, the most creative dimension of the best age of innovation, with the most powerful digital platform ever deployed: mobile. And if you want to see my Around the World in 80 Slides survey of mobile marketing outside of the USA, check out my slides of my MMA Forum presentation via Slideshare.

March 06, 2013

So its that time again. I just finished the 2013 edition of the TomiAhonen Almanac, my annual statistical volume on the status of the mobile industry, and as usual, to celebrate that publication, I will do the big update to all the mobile numbers. You may want to bookmark this page for future reference

MOBILE NOW 6.7 BILLLION ACCOUNTS

So the monster number first. The global count of active mobile subscriptions reached 6.7 Billion at the end of 2012, and yes, this summer we will hit the 'mobile moment' ie that point in time when for the first time ever on this planet, a consumer technology will match the human population in size. The planet has 7.1 Billion people and as we grew subscriptions 14% last year, its rather clear we will hit that 7.1 Billion number around the summer of 2013. What was the penetration rate per capita at the end of last year? 93.7%. And there is no stopping that growth, don't listen to those who once again suggest that we are 'near saturation'. Hogwash! Several countries, led by Hong Kong are past 200% mobile penetration rate per capita. This growth is not stopping anytime soon.

So lets dig in. What does 6.7 Billion mobile subscriptions mean, then? They are not in reality all individual unique users, as we well know by now, many of us walk around with two phones, or others with one phone but several mobile accounts in the form of SIM cards. How many of the 6.7 Billion is the 'unique user' number? 4.3 Billion unique mobile phone owners/users on the planet. 60.1% of the true alive human population does have at least one mobile phone and at least one mobile account to themselves. Never has any technology been this widely spread. We are hitting the limits of electricity (600 million live beyond the reach of the electrical grid) and literacy (800 million adults are illiterate on the planet) yet even they do have mobile phone accounts. Some phones sold in the Emerging World are sold with extra-capacity batteries, other phones are sold with two or three batteries to help with the electricity problem. Vodafone introduced in Africa a charge that works on solar energy and for rainy days, through peddaling on your bicycle. And literacy? Yes, the illiterate won't be buying your smartphone apps anytime soon, but many voice-oriented services are highly appreciated delivering news, sports scores, music etc (and advertising) through the voice channel on the mobile.

ACTUAL PHONES - 5.2 BILLION IN USE

So then what of the phones? The planet has now 5.2 Billion mobile phone handsets in use, so for the 4.3 Billion unique users, so 26% of us - 1.1 Billion people already - walk around with two phones in their pockets. As I've been reporting on this phenomenon over the years, it is no longer a surprise in most markets. But yes, 5.2 Billion digital devices in human hands worldwide, every one of which can do voice calls and SMS text messaging. Most which have a color screen and often camera too. Most which can do rudimentary internet services (on WAP) and the vast majority which can do full HTML 'real internet' as well. While only 22% of all phones in use globally are 'smartphones' actually more than half of all phones in use can accept apps through such technologies as Java.

83% of all phones in use are cameraphones, so 4.4 Billion cameras are used in the world that are also connected to the network and are always carried, rather than the more premium stand-alone cameras that often sit in their cases back home. More than 90% of all humans who have ever taken a picture, have only done so on a cameraphone, not a stand-alone digital or film-based 'traditional' camera.

How massive is this? Mobile phones connected and in use totally dwarf any other tech, outnumbering television sets by more than 2 to 1, personal computers of all types, including tablet PCs like the iPad, by more than 4 to 1, DVD players by 5 to 1. Newspaper circulations by 12 to 1. Even after we account for us Westerners owning many FM radio sets, in our clock-radios, our boom boxes, our home HiFi sets and our cars, when counting for the whole planet, the number of mobile phones exceeds FM radios even, today. The second most sold consumer tech is the personal computer (including desktops, laptops and tablet PCs like the iPad) which has annual sales of about 350 million per year. The third most sold tech is televisions which only sell 250 million per year. Everything else is peanuts below that, from gaming consoles to cameras. But mobile phones? Sold over 1.7 Billion units last year! And by Christmas Quarter, nearly half of all new phones sold worldwide were smartphones. This year, 2013, we will see the cross-over point, where half of all new phones sold will be smartphones. No wonder the world's largest consumer electronics giant, Sony says that mobile is front and center of their future. Here is your table:

So who is the richest man on the planet? No longer Bill Gates of Microsoft, it is Carlos Slim the CEO of America Movil the Mexico-based telecoms giant. Apple Computer changed its name to just Apple when it launched the iPhone and today calls itself a mobile company. Samsung the world's biggest tech company makes half of its profits through the mobile unit. Companies from Warner Music to Electronic Arts to the Associated Press newspaper guild are turning to mobile to make more money. The BBC said that all broadcast content, TV and radio, will be available on mobile. Visa says the future of payments, yes, the future of money itself, is mobile. What is this industry like?

Well, as the global economy struggled to get some anemic growth in 2012, the mobile industry grew its revenues by a massive 12% and hit 1.45 Trillion US dollars in total for the year. The mobile industry set the record for the fastest industry ever to reach that massive Trillion-dollar level (far bigger than for example the PC or TV or internet or advertising industries, just so you have some context). This global economic juggernaut is fuelled primarily by our voice calls and mobile messages (SMS and MMS) but there is an increasing part of revenues coming from 'premium data' services and also a healthy slice from hardware, in particular the handset sales. 3 out of every 4 dollars earned in the industry was service revenues, the remaining 1 out of 4 is hardware revenues ie handsets, their accessories, and the networking infrastructure needed to run these massive mobile telecoms networks. The major breakdown of the industry revenue is:

So what do we do with our phones? I did the analysis of that statistic earlier, that we look at our phones 150 times per day. That gives a pretty good idea of where our time goes with the phone - messaging obviously, and voice calls, but also our clock and alarm, the calendar, our camera, the web browser, some games and music, news alerts etc. How do we use our phones? This is how I broke it down:

How Typical User Looks at Mobile 150 Times Per Day GloballyMessaging related 23 times per dayVoice call related 22 times per dayClock 18 times per dayMusic Player 13 times per dayGaming 12 times per daySocial Media 9 times per dayAlarm 8 times per dayCamera 8 times per dayNews and alerts 6 times per dayCalendar 5 times per daySearch 3 times per dayOther random web browsing 3 times per dayCharging phone 3 times per dayVoice mail 1 times per dayOther miscellaneous uses 10 times per dayTotal 150 times per daySource: TomiAhonen Almanac 2013This data may be freely shared

MOBILE HANDSET FEATURES

Then we of course look at the handset side of mobile in the Almanac. I devote a whole chapter to the handset numbers including the highly popular chart updating the global mobile installed base of the 5.2 Billion handsets in use, by their features. How many have a color screen, or have a camera, or have WiFi, etc. Here are the top-line numbers:

Much much more in the TomiAhonen Almanac 2013 including the penetration rates of touch screens, of QWERTY keyboards, the camera resolutions of cameraphones, etc etc etc, plus of course also the 'horse race' statistics of who sold the most phones last year by brand.

SMARTPHONE INSTALLED BASED BY PLATFORM

What of the mobile 'ecosystems' out there? You often hear of single quarter sales that may fluctuate a lot. Individual handset makers may shift their allegiances from one smartphone OS platform to another. What is the state of the industry now, by installed base of smartphone platforms. That is the 'bottom line' question, isn't it? I keep reporting the status of the installed base here on this blog as I do my quarterly review of the smartphone races. This is what the world looked like at the end of 2012:

But there is so much more in the Almanac. I have whole chapters on mobile advertising and marketing, mobile music, mobile social networking, mobile TV and video, mobile gaming, mobile messaging - yes, of course this year's edition includes OTT messaging cannibalization measured - etc, etc, etc. I give you counts of apps and voice calls and enterprise/business accounts and 3G migration rates. The Almanac includes a whole chapter on the Digital Divide, so it shows how the advanced 'West' or Industrialized World mobile numbers differ from the 'Emerging World' where most people live, in Africa, Latin America and the less-developed parts of Asia like India, China, Indonesia, Pakistan etc. I also give more details on the business-side of this newest and fastest-growing Trillion-dollar industry ever, like my exclusive TomiAhonen Consulting index of mobile leadership that many seem to like and use.

WHAT COUNTRIES ARE THE GLOBAL LEADERS IN MOBILE INDUSTRY AND INNOVATION

Here is the newest top 12 ranking of the world's most advanced countries by their mobile industry, handset, consumer and services maturity:

And yes, the USA is gaining on that chart, and has moved up from its rank last year of 17th to its current ranking of tied for 15th with the Netherlands, just ahead of UAE, and just behind Israel and Norway. But when the USA is barely past its 100% per-capita mobiel subscriber count - and Hong Kong for example has passed 200%, or the USA is near 50% smartphone ownership where Singapore is past 80%, and where the USA still sells handsets and subscriptions to second generation 2G network based technology while Japan has shut down the 2G networks and is all 3G or faster, obviously there are other countries that are well ahead of the USA in their mobile industry. Harsh truths, but we deal with the truth on this blog. And yes, for those who do not know my index, I use the four most used and most representative statistics on the maturity of the industry, to generate my index: the mobile phone subscription penetration rate per capita; the migration rate to more advanced networks, the mobile service adoption rate, and the migration of the handsets to more advanced phones (ie currently measuring the migration from dumbphones to smartphones). And most international mobile industry experts will agree that Japan, Singapore and South Korea are world leaders in mobile, and that Finland, Sweden and Italy are the European leaders, where the Industrialized part of Asia and advanced parts of Europe are well ahead of North America, Latin America and Africa in their mobile adoption and yes, Australia is well ahead of North America as well. By the way, the Almanac has much more on the index and the top 30 countries if you need more.

But there are much much more data points in the Almanac, including a stats table section where we have the 60 biggest mobile countries and details on them like their subscriber counts, penetration rates per capita, and exclusively, also their unique mobile owner counts, plus such data as what countries have launched 3G and what have launched MVNO services etc. There are tables of what countries lead by subscriber counts, by penetration rates, by 3G migration rates etc. And there is the list of the biggest mobile operator groups.

WHO ARE THE GIANT COMPANIES OF THIS TRILLION-DOLLAR INDUSTRY?

And as always, the TomiAhonen Almanac includes my exclusive listing of the world's largest companies, when measured only by their mobile revenues. So for example for Apple we remove the Mac, iPad and iPod related incomes, for Vodafone we remove their fixed landline business and for Samsung we remove their plasma TV business and chips business, etc. What are the world's largest companies in 2012 when we only measure their mobile business? This is what the top 10 looks like for 2012:

The above data shows how strongly Apple and Samsung have already jumped up the charts powered by their smartphone businesses (and by contrast, the once giant 'Nokia Mobile' has tumbled down to 12th and is falling further). The European operators/carriers saw their industry hit by the new EU regulations that cut their international interconnect revenues, so all Europe-based carriers/operators saw a bad fiscal year and their rankings tumbled for the year. That should stabilize now for the next year. And as to Samsung and Apple, remember, their phenomenal growth is continuing. This data was through only the second calendar quarter of 2012, to harmonize this chart with the annual Fortune Global 500 issue. So the two smartphone maker giants are sure to move up even more for next year.

So there is your summary data for the industry for big industry numbers. This year, two huge milestones coming - the Mobile Moment will hit us this summer, when the count of active mobile subscriptions will match the count of human population alive on the planet, and also probably in the summer, we will reach the point where half of all new phones sold will be smartphones.

As always, you may share and use any data in this blog, create your own diagrams and pictures, use this data in infographics etc. Please refer to this blog if you can, or just list that the source is the TomiAhonen Almanac 2013.

And for those who want to see it, or order it, remember the Almanac only costs 9.99 Euros and you can have all these stats - and literally 91 more charts and tablets not mentioned in this blog (the latest Almanac has 98 tables and charts in total) - on an ebook you can install onto your smartphone, iPad or laptop and carry all the mobile data at your fingertips. For those who already own the 2012 edition, all the data is updated obviously, and new charts in the 2013 version that weren't in the 2012 edition are: 150 Times Per day (in mobile Customers chapter), a chart showing MMS migration rate from SMS and another showing OTT cannibalization are new, while the OTT user count is added to mobile messaging user chart (in Messaging chapter), the Social Networking chapter adds a table of the biggest social networks when measured by their mobile users. The 2013 edition of the Almanac runs 194 pages. To see more here TomiAhonen Almanac 2013.

January 22, 2013

I've been working on that 150 times per day number. You may have heard it, Nokia was first to publish the number in 2010, saying that on average a mobile phone (not smartphone, any mobile phone) user will look at the phone 150 times per day. This not only in wild and woolly Finland, but across the planet. We had seen big numbers before, but they were all under 100 times per day and Nokia's bombshell 150 number was widely reported. And then, last year, T-Mobile USA verified the number for the US market as well - a market that severely lags the Industrialized World average in most things mobile - lagging often even many advanced Emerging World countries... So when the USA cellphone users (not smartphone, any cellphone) are looking at their phones 150x per day, thats getting pretty serious.

UPDATE OCTOBER 8, 2014 - Now there is finally a consumer survey published with a published number. A UK survey of only smartphone users (not dumbphones included) found as one might expect, an even larger number. The survey of 2,000 British smartphone owners found they look at their phones 214 times per day. Read more here.

And last year we heard that in the UK, the average smartphone user looks at the phone 200x per day. But lets not worry now about Angry Birds addiction. Lets remain with the basic phone - four out of every five mobile phones in use on the planet still today is a 'dumbphone' ie not a smartphone. I have been trying to validate the 150x number and I've gotten pretty close. So this is my 'argument' in support of 150 times per day. WHAT would a 'typical user' do with the non-smartphone today, that results in looking at the phone once every 7 minutes of every waking hour of every single day? I'll paint a scenario, using for the best part, consumer statistics on behavior on phones, or replacement behavior, plus some observations and personal experiences and chats with some fellow experts.

MESSAGING 23 TIMES

So lets start with the feature used by more than any other as a percent of all mobile phone owners. No, its not voice calls anymore, more people have abandoned voice call use, than don't use SMS text messaging. The primary use of a mobile phone (including smartphones by the way) is mobile messaging. So, what kind of behavior do I see that gets us 23 looks at the phone as a messaging tool. The average person does not send 23 messages per day..

Among active users of SMS, the number is 6 SMS text messages sent per day. If you send 6 messages, you average also receiving 6 messages from your friends. Thats 12 times right there. But what's the rest?

Once per day we draft a message we don't send, or draft a message and save the draft, to edit and send ti later (remember, these are pretty addicted users, who send and receive 6 messages daily). Then we re-read messages (yes! We all do!). So the saved message that we love or hate or didn't understand. I'd say on average 2 times per day we re-read a message we read before. Plus we'd receive perhaps 1 unsolicited message, an ad or alert or reminder etc. And then we anticipate! We check in case there has been a message that had arrived, maybe we are awaiting a reply, maybe we hope for a contact, etc. I say we look for a message that isn't there typically more often, than messages actually arrive - so that would be 7 times we seeked a message that hadn't arrived (yet). That gives us 23 times looking at a phone relating to messaging. (and please don't write about OTT services like iMessage, Whatsapp, BBM or Skype - these are all used by a tiny tiny sliver of the total worldwide population, only Skype reaches 1 Billion users, vs over 5 Billion active SMS users. We are not talking of heavy messaging fanatics on smartphones on WiFi or all-you-can-eat data plans, we are talking typical users worldwide. That means SMS, not OTT)

VOICE CALLS 22 TIMES

Then the voice calls. The average phone user places 3 calls per day and also receives 3 calls. Where are the other 16 times? Interruptions! We have a dropped call (1x per day) or we make a call attempt that won't go through (1x per day). We miss a call that was coming, too slow to pull the phone out, or forgot we had changed our ringing tone (yes, we all have done that too). I say 1x per day we miss a call. Avoid a call? Yes that we also do, we see whose calling, and decide not to talk, send the bastard to voicemail jail. Thats 1x per day. But you know what. We look at the phone we we start the call - we ALSO have to look at the phone to end the call. So out of the 7 actual phone calls, we have to end 7 calls, that gives us 7 more times to look at the phone. Now I'm at 17 times per day. Where are the last 5? Anticipation again. We look at the phone awaiting or anticipating a call or call-back. I'd say 5 times per day. That gives a total of 22 times we look at our phone relating to voice calls, per day.

CLOCK 18 times per day

If the average person sleeps 8 hours per night, that gives us 16 hours awake. I say we play with the alarm going to sleep and waking up, so out of the 16 hours, there are only 14 hours when we are reasonably awake and care about what time it is, when we don't fiddle with the alarm or snooze. And of that, we then have some moments on a typical day, that we are anxious about time - in the morning, going to work or school, worrying about being on time - and I'd say we look at the clock two times at that occasion, rather than once per hour. Same around lunch-time at work/school, when is this interminable meeting going to end, isn't it lunch-time already? And again, at the end of the work/school day - when we anticipate getting away from work/school. So on those occasions, I'd say conservatively that we look at the clock twice per hour, and on other times, we are curious about what time it is, roughly once per hour - often very habitually, and even subconsciously - so you know the story, the wife sees the husband just glanced at the watch, and asks him, what time is it, and he can't tell you, even though he just looked at his watch a moment ago... Anyway, I get 18 total times we look at the clock on the phone, not counting setting or resetting or shutting the alarm.

ALARM 8 TIMES

Which brings us to the alarm. I've been saying for years that the mobile is the last thing we see before we fall asleep and the first thing we see when we wake up. Its nice to see that was also verified by the Time global mobile survey finally in 2012. But yes, what of the alarm? To set it, I'd say the average person does that once, and then once before falling asleep, or waking up at night, or a little before the wake-up, looks at the alarm setting, just in case. Thats 2 times total. Then the wake-up alarm, 1x more. And then snoozing. I'd say average person snoozes three times? That gives us 6 uses of the alarm as a wake-up. But its not the only use of the alarm. We also use it as a convenience reminder during the day. I'd add 2 more uses of the alarm daily, once to set, once to turn off the ringing. That gives us 8 times we look at the alarm feature on the phone.

CAMERA 8 TIMES

Then the camera. Most of us are not shutterbugs who take dozens of pictures every day, but the consumer surveys suggest the average cameraphone owner takes about 1 picture per day. How do I get 8 times to look at the phone? First we have to launch the camera app. Then we have to aim the camera at our object. Then we take a picture. And we have to check if the picture turned out good. And likely it wasn't good enough. We take a second picture. And look at that picture, decide its a keeper. Then we delete the first pic. And finally, we randomly look or show a picture during the day. That gives me 8 uses of camera.

MUSIC PLAYER 13 TIMES

Not everybody uses music on the phone but nearly half of mobile phone owners do consume some kind of music from music streaming services to using the phone as an MP3 player to ringing tones. Lets take the music player option - nowadays a staple with very modest priced dumbphones already. And I think a typical user would find 4 times per day to listen to music. When listening, sometimes we hit a song we don't like or don't feel like listening to (or finishing) so we skip. I'd say we skip 3 times per day. Like a voice call, we have to turn off the music player when we're done, thats another 4 times we look at the phone. And I'd say on average we get interrupted once per day to pause the song that is playing - such as for an incoming call or message - and then resume the music. That gives me 13 times looking at the phone for music consumption.

GAMING 12 TIMES

For gaming, I'm now thinking basic time-killer games like Snake or Tetris, not Angry Birds. Launch the game 3 times, end the game 3 times. Interrupted twice, resumed twice, and looking at scores or settings 2 times per day. 12 times of use of the phone for gaming purposes.

CALENDAR 5 TIMES

I think a calendar might be used 5 times per day, once to make a new entry per day, 3 times to see whats up next, and once to edit or delete an entry.

SOCIAL MEDIA 9 TIMES

Accessing Facebook, Twitter of the like perhaps 5 times per day. As the usage tends to be longer, there is plenty of opportunities to be interrupted, so I'd say 2 interruptions and resumptions per day. Remember, we are talking of typical users, not heavily addicted youth, so the usage is not intense, also these users are not on 'all you can eat data plans' so their social media surfing is somewhat limited by the costs involved.

NEWS 6 TIMES

Nearly half of all mobile phone owners already consume news on their phones. It would mostly be on two primary types, the type where you go find the news ie access your fave news site(s) like the BBC or CNN or for pop music celebrity news, MTV etc.. And then there are the alerts you may subscribe to. I'd say 4 news alerts arrive per day and we actively go to news sites twice per day, for a typical user.

SEARCH 3 TIMES

And yes, increasingly we use search on our phones. But the search behavior is markedly different from PC based online access to Google and our other search engines. Mobile search is often urgent and very specific. But it often becomes the most valued app and service on the phone. A third of people in New Zealand have for example used mobile search to settle a bet or argument. Like I say, the mobile has become the Magical Truth Machine in our pocket. But lets say the typical user only searches 3 times per day on the mobile (remember, several hundred million internet users on mobile don't even own or have access to any PC based internet device, their dumbphone and its web browser and clumsy keyboard interface is the only internet they have access to - and at per-use data charging too!)

WEB 3 TIMES

And random internet services. Going to the website of the bank, or the travel agent, or the ecommerce site, or whatever. Again, I'd think this number is easily much bigger, but lets keep it at 3. Remember, these are NOT touch screen iPhon-a-clones, these are rudimentary basic phones, featurephones at best.

VIDEO 6 TIMES

Mobile videos are easily addictive and many carriers offer special video tariffs on their 3G data plans etc. We often receive links to videos, and videos can be sent and received via MMS. I'd say we watch 4 video clips per day, interrupted once, and resumed once. That gives us 6 uses relating to video. This also includes saved videos on our phones, something we shot on our own cameras, something that was forwarded to us, or perhaps moved via a microSD card or Bluetooth. And isn't it funny, we will look at that tired short video clip many many times when we have nothing else to do...

CHARGING PHONE 3 TIMES

And then the charging of the phone. We connect the phone, we come to see if its charged yet (not yet) and we remove the charger when the battery is full or we can't afford to wait longer. Three times we looked at the phone relating to its recharging, on a typical day.

VOICE MAIL 1 TIME

And we access our voice mails perhaps once per day. Remember, when one of our calls is redirected to voice mail, we are indeed using someone else's voicemail but it doesn't require us to do anything at our end, its just that the voice call was kind of hijacked by the voicemail system. But when we have to go listen to our voicemails, then yes, we have to make the extra effort.

If my math is correct, we are at 140 times per day. Then lets toss in random other uses about 10 times per day, including maps, downloading apps, voting for TV shows, using the torch/light feature (or turning the screen on in the dark for same effect), showing the phone such as placing it on a table, doing the SIM-card-switch, sending or receiving Bluetooth files, installing or removing microSD cards, replacing the battery, receving a mobile ad, making a m-payment like parking, bus ticket, lottery, or looking for a WiFi connection, double-checking battery status, etc etc etc etc etc.

That gives a totally plausible 150 times per day for a non-smartphone user who is not a massively over-addicted youth user either.

So what do you think? Did I miss obvious areas that have large usage globally across all ages and demographics - remember, we cannot focus on smartphones, only one in five mobile handsets in use today is a smartphone (but are now selling more than half of new handset sales in many countries, so this will change rapidly).

All analysis here not explicitly identified by source is source: TomiAhonen Consulting January 2013. The data and examples and calculations in this blog may be freely shared and also may be freely turned into any graphics.

And for those who need to understand the mobile market more deeply, check out the TomiAhonen Almanac 2012 - buy it now, get the 2013 edition when it is released in a few weeks, for no extra charge!

January 10, 2013

I want to talk about Engagement Marketing today. I have been
planning this blog article not for months, for years, and I always put it off,
as I find my draft has gone out-of-date and I never end up finishing my primer
about this radical advertising concept. But I took advantage of the holiday
season and updated all of this again and now finally am ready to post my
definitive blog about Engagement Marketing and mobile. You may want to bookmark
this blog. And yes, this is a chapter-length article, runs about 9,000 words on the cutting edge of mobile advertising with tons of stats and astonishing case studies and I promise you, massive response rates. Massive. Nothing you ever get online, ever ever EVER.

SHOCKING STATS

And I like to start with the stats. This spring mobile phone subscriptions on
the planet will grow past the total human population alive. That means, yes, 7.1 Billion active mobile phone accounts on the planet with a population of 7.1 Billion people alive from babies to great grandparents. Yes the Mobile
Moment is nigh. But that is not shocking (not to readers of this blog anyway) nearly 100 countries have passed 100% per-capita mobile penetration rates, even the USA joined the club two years ago... No, lets look at the addiction level. T-Mobile USA reported that the average cellphone user in America looks the
phone 150 times per day. The Guardian published a stat last year that for
smartphone owners in Britain, its 200 times per day. If you look at your phone
200 times per day, its once every 5 minutes of every waking hour. No other
media has ever had this level of addictive behavior. And even this is not
shocking to my regular readers on the Communities Dominate blog. Lets get to
mobile marketing..

SMS RULES

The Digital Marketing Association reports that 97% of
messages sent via SMS are read, compared to only 20% of emails that are read.
Ofcom, the UK telecoms regulator reports, that SMS text messages are read on
average within 5 seconds of receipt (and I always add, that email stats say
average emails are read within 24 hours). The Mobile Data Association reports
that SMS text messages have an average response rate of 26% compared to 5% for
email. Did I get your attention?

And how does the UK, the country where the world's first SMS
was sent, take advantage of this lightning-fast media format, that reaches
every pocket and has massively higher 'open' rates than email? 26% of UK
businesses still in this day and age, literally 20 years from the first SMS, never
use SMS, based on the 2012 survey of UK businesses by Textlocal 2012. Of the
74% of UK businesses that do use SMS, check out this experience: 88% found SMS marketing effective vs 11% not effective by
the same Textlocal survey.

Now for the sickening part. An October 2012 survey of UK consumers by
Textmarketing found that 89% would like to receive parcel delivery notices via
SMS, but only 26% in Britain had received any. 84% would like appointment
reminders like from doctors, hairdressers, dentists etc, but only 29% had
received any. 68% of British consumers would like to receive offers and
discounts from the brands they use, but only 12% had received any! What a
massive, massive gap between what consumers want, and what UK businesses
deliver, in the country where SMS was first enabled, and a country that passed 100%
per-capita mobile subscription penetration level ten years ago.

Before you Americans snicker at those British statistics, don't forget that the
USA lags Europe in mobile, so its actually worse in the USA. For example, a November
2012 Pew survey found that while 80% of Americans use SMS text messaging, only
9% had received any kind of alerts from their health providers. I delivered a
keynote to SOCAP the biggest international customer relationship management
association in the USA, the audience was stunned and shocked by what all I told
them about mobile and SMS. These were customer relationship VPs and directors
for Fortune 500 companies, and they were not aware of how massive this
opportunity is today. So yes, don't snicker there across the Atlantic..

DON'T COPY WHAT IS HATED

So we know that consumers hate interruptive ads on TV and on the internet. We
have created perfect mobile clones of those hated ads, but now deploy them on
the most personal, the most intimate mass media ever, the mobile. And we find
that people hate banner ads and pre-roll video even more on mobile than they do
on TV and the internet. A brand new December 2012 Forrester survey of consumers
found that mobile banner ads and pre-roll video interruptive ads on mobile are
hated more than TV ads! 62% found mobile banner ads annoying, and 73% found
pre-roll video ads on mobile annoying! Whereas SMS text messaging that had been
opted in, scored consistently better than any other ad formats and - get this -
47% of US consumers in 2012 - felt that opt-in based SMS ads were useful !

So we copy what is hated, meanwhile there are mass media
communication formats that are beloved by consumers, that reach a far larger
audience, and achieve far greater satisfaction and far less rejection than
interruptive ads - ie SMS and MMS - mobile messaging - and in countless uses,
the consumers hope, ask for and even expect to be communicated with by using
this method - and the brands hide their heads in the sand. What is wrong with
this picture? I am so frustrated reading the surveys and analysis of big brands
and ad campaigns conducted in 'my backyard' ie in mobile media, where the
giants utterly misunderstand this media opportunity and proceed to wantonly
destroy consumer satisfaction and affection.

E EQUALS M 2 C

My very dear friend and one of the earliest pioneers of mobile advertising and
marketing is Spanish mobile maven, Agustin Calvo. He ran Movidreams in Spain
and founded Qustodian to specialize in mobile marketing. He just tweeted a few
weeks ago a funny formula playhing on Einstein's famous law of relativity:

E = M2C

Engagemement = Mobile To Community

I very much love this formula, it encapsulates so much of
what should be done - and so painfully often is not done - in mobile
advertising and marketing today. Engagement equals Mobile to Community. Just
look at a banner ad or pre-roll video ad today. They are 'Mobile To Consumer'
not 'Mobile To Community'. The ads are interruptive in nature and are not in
any way built to entice consumer engagement with the consumer's community of
interest. That may result in 'interaction' of a consumer clicking on the banner
ad or link - and if the video is funny, it might even become 'viral' but it is
not Engagement Marketing. It may even be 'engaging' with a consumer, but is not
'Engagement Marketing' to empower a community. Where is the distinction and
difference. I will spend this blog discussing the depth of Engagement Marketing
to the best of my understanding of it.

ALAN MOORE INVENTED ENGAGEMENT MARKETING

So we go to the source. Alan Moore, yes 'our' Alan Moore the
co-author of the signature book to this blog - Communities Dominate Brands -
the British veteran ad industry guru who has written several books on mobile
and tech (not to be confused with the 'other' Alan Moore the science fiction
writer). Alan coined the term Engagement Marketing more than a decade ago and
has been teaching the world about it ever since. Lets take the defiition here
to be very clear:

DEFINITION OF ENGAGEMENT MARKETING

Engagement Marketing is the process of involving consumers
in the co-creation of brand experiences.

Engagement Marketing is not 'Engagement Advertising' alone.
It can involve the advertising side of marketing, but marketing as a science
and discipline covers far more than marketing communications ie advertising.
Marketing according to classic Kotler involves the Four P's of Product
(design), Place (distribution channel), Price and Promotion (which includes but
is not limited to advertising; promotion also includes other actions such as
public relations, publicity etc).

INTERACTIVE IS NOT SAME AS ENGAGEMENT

Interactive Advertising (or Marketing) is not the same as
Engagement Marketing although very many who talk about making their advertising
or marketing campaigns 'engaging' will think that making them interactive is
the same thing. The definition says 'co-creation'. If I click on a link to your
web page, and go to your product catalog and select the particular color of the
t-shirt I want to buy, that is all very interactive, but it is not engagement
marketing, because I was not involved in the 'co-creation' of that brand
experience in any way. I navigated the brand's tightly controlled environment.
It was interactive but not Engagement Marketing.

Compare to this example - if it is Nike's T-shirt design page, and I am allowed
to upload my own photo to paint onto the Nike T-Shirt which will still carry
the Nike 'swoosh' logo - now we have co-created something together. Only then
is it 'Engagement Marketing' - but you understand how much more this is now a
'process' issue for Nike. What if I upload a picture of myself strangling a
picture of President Obama, and that T-Shirt is manufactured by Nike with their
logo and I wear it - they could be sued as a corporation for enticing race
hatered... Just because your website or internet or mobile campaign is
'interactive' does not make it Engagement Marketing. But Engagement Marketing
has to be interactive. So in a Venn Diagram, Engagement Marketing is a small
circle wholly inside the far bigger circle of Interactive Marketing. All
Engagement Marketing is Interactive but not all Interactive Marketing is Engagement
Marketing. One common misconception is now cleared.

VIRAL IS NOT SAME AS ENGAGEMENT

A second common mistake about Engagement Marketing is the confusion with Viral
Marketing. Yes, often a good, 'engaging' campaign can become viral - and in
most cases becoming viral is very good for a modern digital interactive
campaign - but being viral is not the same as Engagement Marketing. Why?
Co-creation. Engagement Marketing is not simply the process of echoing what the
brand sent out, even if one does to a wide 'community' through modern social
media means like Facebook, Twitter, etc. A great viral video can yes, help
promote the brand - look at Psy and Gangnam Style - but that is not
'co-creation'. Lets take this case and explore. If Psy allowed his fans to co-create
variations and versions of his music video - and help spread those - only then
would it become 'Engagement Marketing'. This is what for example another rap
artist Seeda of Japan did with his new album. Seeda created a sound-based
treasure hunt across Japan. Follow the trail to find Seeda's favorite places,
at every place you get Seeda tell in his own voice why that place is special,
and hear at that location one track from the new album. When the album was
finally released, it debuted at number 1.

So while often successful Engagement Marketing tends to have
viral elements and can go viral, not all viral campaigns are Engagement
Marketing. And its possible to have Engagement Marketing without any viral
element to it. Thus in a Venn Diagram, Viral is a big circle, partly
overlapping Engagement Marketing the smaller circle. Most of Engagement
Marketing is inside the Viral Marketing but not all. Most viral marketing is
not Engagement Marketing, but most Engagement Marketing does have Viral
elements in it. That is why it is easy to confuse the two.

ENGAGEMENT IS NOT SAME AS USER-GENERATED ADVERTISING

This is perhaps the most difficult part. We all know of
stories where passionate fans of some brands have gone to extraordinary lengths
to create original advertising or marketing or branding to their favorite
brand, from Harley Davidson motorcycle fans physically branding themselves with
Harley tattoos, to many Apple fans doing iPhone ad tributes onto YoutTube to
the guy who made furniture out of Fedex boxes (And was sued by Fedex for
damaging the brand, haha, what morons at Fedex)

User-Generated Advertising can be very compelling and deeply involving and
obviously very 'engaging' to that individual consumer or fan. It is not what
Engagement Marketing is all about, because the brand is not involved and
usually is wholly ignorant of this activity, until the video suddenly pops up
on YouTube. Remember the definition, Engagement Marketing is 'co-creation' of
the brand experience. Not User-generated, but 'co-created' both with the
consumer(s) and the brand.

ENGAGEMENT IS NOT PERSONALIZATION

And while very often Engagement Marketing results in the
personalization of the marketing experience ie to my model car, its color, etc
- that personalization is not by itself 'Engagement Marketing'. We have had
these abilities forever in marketing. Car makers - even in the time of Ford's
Model T - allowed us to customize our cars to at least some colors, and often
more premium cars offer wide ranges of colors, Aston Martin for example will
match the color of your Aston to any color you bring in. Personalization by
itself is not Engagement Marketing, but often Engagement Marketing does allow
us to personalize our experience. Only when the marketing itself allows our
co-creation, then it becomes Engagement Marketing. So for example Coca Cola in
Australia, which now allows consumers to order custom cans of Coca Cola with
your name spelled in the Coca Cola script on the side of the can - that is
Engagement Marketing. Why? Because the Coca Cola drink did not change, it was
the packaging - ie the marketing - the branding - which is now co-created.
Tomi-Cola with Coca Cola... Those
packages of the soft drink - the cans - are now co-created. This is definition
Engagement Marketing. When I bring a six-pack of Tomi-Cola to the party at my
friend's house, I am actively marketing Coke by co-branding it with my name.
That is Engagement Marketing using personalization. Not all personalization is
Engagement Marketing, but Engagement Marketing can be powerful if it includes
personalization.

SO THIS IS ENGAGEMENT MARKETING

So Engagement Marketing is the process of involving
consumers in the co-creation of brand experiences. Now that we know what is not
Engagement Marketing, lets start to look at a few famous examples to get clear
view of what it can be.

Co-Creation of Product Design. Lego invited some of its most
passionate fans as an experiment in 2005 to join together and design a new Lego
toy. The fans sat together, had all the manufactured Lego bricks at their
disposal, and created the ultimate Lego toy kit, a train engine they called the
Santa Fe. Lego launched the toy with its standard first-set run of 10,000 kits
and sold out in two weeks as the best new Lego toy launch in Lego history. This
brings us to the lesson Alan Moore regularly drills into the heads of his
audiences - we embrace what we create. When you have your fans co-create the
brand experience, they are involved, embedded in that process and will embrace
it. They will then go and tell the world how great that new thingamajig will
be, that they were involved with, to help it become a success. Note this
happened at the dawn of social media. Today with Facebook, Twitter etc, the
opportunity for fans to celebrate what they co-created will be far bigger
still. As we say on this blog, Communities Dominate Brands.

Now, not every industry can do this, have its consumers come in and start to
collaborate in product design, but did you know Boeing's 787 Dreamliner
included inputs from over 10,000 Boeing fans, non-aviation engineers, who
helped co-create the design. And Lays the potato chips has run the campaign now
successfully on several continents, inviting fans to make suggestions of the
new flavors - suggestions sent in of course via SMS text messages. Best flavor
suggestions voted, top 3 test-marketed and most successful of those will be
fully launched. The person who suggested the winning flavor earns 1% of every
Lays package of that flavor sold ever since. By the way, the idea was first run
in India and since done in South Africa and Guatemala in Latin America etc.

PROCESS IS NOT ONE AD

And lets understand Engagement Marketing at its heart. The world's first
company built from ground-up to run on Engagement Marketing principles, had by
happy coincidence Alan Moore as one of its Board Members advising them. It was
the innovative mobile service provider in the UK called Blyk, a few years ago.
Blyk got a lot of attention early, with some high-powered founders including
the ex-Nokia President Pekka Ala-Pietila who had been expected by many to be
named Jorma Ollila's successor back when Nokia was the mobile industry giant.
Blyk then seemed to vanish very suddenly and a lot of false stories spread
about how it ended. Blyk did not die in the UK market, it was so successful,
they were brought in by Orange one of the big 4 networks to run their in-house
mobile advertising and marketing as a platform provider. Meanwhile Blyk has
since expanded to many countries from the Netherlands to India repeating the
same successs they had in the UK.

The gimmick with Blyk was not that the youth could get free calls and free
messages in exchange of some ads. The gimmick with Blyk was Engagement
Marketing. By using Alan Moore's Engagement Marketing principles meticulously,
Blyk achieved the ultimate in advertising - and as the first mobile company to
do so - their process was so powerful, compelling, relevant and beloved, that their consumers requested more ads!

Go back to the survey I reported on the top. People hate ads
on TV so much, they buy TiVo and PVR boxes to be able to skip ads altogether.
And when some clueless advertisers run barrages of spam and banner ads and
interstitials and preroll video and force consumers to be interrupted on their phones
to be bombarded with ads, of course the consumers hate those mobile ads even
more than the TV ads.

Then compare to Blyk. Consumers 'love' ads? So much so, that they ASK for MORE
ads? Yes they do. This is no anomaly. We did the analysis here on this blog and with
support from the experts over at Forum Oxford, we found that Blyk ran over
2,600 individual mobile ad campaigns over a year for 200 of the topmost global
brands like Coca Cola, Ford, Mastercard, L'Oreal and Levi's. The average brand
loved the Blyk experience so much, they ran yes - on average 13 campaigns on
Blyk per year - more than one per month. That will not happen on any brand new
media unless it is highly - incredibly - unbelievably - unprecedentedly
successful.

Check this out. The average Blyk users - a youth user between ages 16 and 24 -
was bombarded by 6 marketing messages on average every day (they did not have
to consume them daily, they could take them whenever they wanted, that is part
of the beauty of mobile, we can cut the linear relationship between content and
its advertising. I can have my free Blyk call today and watch 6 ads on Saturday
to pay for it. This only works on mobile where our mobile phone numbers are as
near to unique and personal, as being the nearest thing to a global ID number.
In many parts of Africa, people will identify their house number by their
mobile phone number listed on the door, not the house number on a street where
the streets might not be named, and many people can't even read...)

So back to Blyk. You are bombarded by six mobile marketing messages per day.
How much will you hate that? Its 42 ads seen per week, 180 ads you have to
watch per month, every month, to get the modest free minutes and free messages
allowance from Blyk. How much did the youth hate these ads. After 2,600 ad
campaigns to 200,000 youth consumers in Britain, Blyk sustained an average
response rate of... 29% !!!!!

TWENTY NINE PERCENT

That is not twice as good as on the internet. Its not five times better. Its
not ten times better. Its about 100 times better response rates than we see on
banner ads on the internet! Yes, that is no misprint. 29% response rates - not
click-through rates mind you, even better, these are actively wanted
engagement, responding to an ad, often answering a question or poll or giving
an opinion. 29% response rate after 2,600 ad campaigns while the youth received
2,200 mobile marketing messages per year.

If I promise you 29% response rates on average (some easily above 45% if the
campaign was better designed and well targeted on a highly popular brand etc)
and the option is to do mobile banners that are hated and get in best cases
something like 3% or 4% click-through rates on mobile (still 10x better than
online, obviously) then WHY would you even consider the stupid banner ads. And
this.. and this before... (drumroll)

BIGGEST COMPLAINT BY USERS - WANT MORE ADS

I am not making this up. Jonathan 'JMac' MacDonald now known as the mobile
marketing guru and author, back in the day was 'just' an ex Ministry of Sound
music guy who had joined as Blyk's UK Sales VP. He said in 2008 that the
biggest complaint the Blyk calling center was getting from the 16-24 year old
users, the number 1 complaint was .. how can I get more ads? After bombarded by
over 2,200 ads per year, and voluntarily, willingly responding to 29% of those
- the youth users loved Blyk ads so much, they wanted MORE OF THEM? How is this
possible? This was built on Engagement Marketing principles. Now we will go
through the process, I show to you, how teenagers will become so in love with
Blyk mobile marketing messages, they will crave for more and will rush to open
them immediately. This is the how.

HOW TO DO ENGAGEMENT - BLYK'NAM STYLE

Imagine two girls, teenagers, 17 year olds. BFF's Best
Friends Forever. They like the same bands, eat the same foods, dress the same,
use the same colors in makeup. And they both have joined Blyk. One of the girls
is totally honest, tells Blyk everything she likes - fashion, makeup, rock
music. The other, thinks she'll 'game' the system, and not reveal all about
herself, and thinks she'd just like some makeup advice and coupons and tells
Blyk she only likes makeup.

So one of Blyk's advertisers, L'Oreal notices two girls with interests in
makeup and sends the first contact communciation, asking if they would like
more info from L'Oreal, and also - asks in an MMS message, showing some colors
of lips, asking which color of lipstick the girl favors.

MUST BE OPT-IN

One. Lets stop right here to start with. The reason any true Engagement
Marketing campaign can get 29% or 35% or 45% response rates is that Engagement
Marketing starts from the premise of 'Opt-in'. It has to be opt-in. There is no
spam in Engagement Marketing, ever. You have to ask for permission. This is a
painful step to many who prefer to shotgun their advertising via television or
other imprecise mass media channels, but the unique abilities of mobile start
with unique benefit number 1 - mobile is the first truly personal mass media
channel. So ask for permission. There cannot be Engagement Marketing without
opt-in. Learn this, internalize this, or be condemned to the scrapheap of
advertising history soon as an obsolete dinosaur. All Engagement Marketing is
opt-in based.

Lets return to the two girls. Blyk sends the MMS message with six pictures of
lips. Both girls respond the same way - they don't pick fiery red or pink or
dark maroon or natural, they pick black. These two 17 year old girls are what
is known as 'Goths'. Girls who dress in black-and-white, look anemic every day,
seem angry and depressed and listen to Gothic rock music like say, Finnish rock
band Nightwish.

Today L'Oreal has sent these two girls one MMS ad, got both to respond saying
yes they'd like more messages from L'Oreal, and both picked lipstick color of
black. The two girls will still need to see five more ads to fulfill today's
quota. L'Oreal accepts their responses - and now the magic starts to happen.
L'Oreal adjusts ALL of its future marketing messages to these two girls to only
feature black-and-white fashion images, in Gothic styles.

Two days later, the second message comes from L'Oreal to both girls. L'Oreal
asks which is the supermodel the two girls most admire. Again it is an MMS with
six pictures of fashion models that are under contract for L'Oreal. Note -
every one of the six models are pictured of course wearing black lipstick...
And the girls both have identical tastes, they both select the actress Eva
Longoria (from Desperate Housewives).

Two messages, and L'Oreal now adjusts all future marketing messages to always
use pictures of Eva Longoria, not the other 5 models, and always use Eva in
colors of extreme gothic Black-and-white.

After two iterations, the 'personal' marketing channel from L'Oreal to these
two girls has become far more representative of their personal tastes than
anything in any print magazine could ever be. Vogue, Cosmo, Elle or Seventeen in
print format could never, EVER have such highly targeted ads as L'Oreal can now
do for these two girls. And obviously, a class-mate of their who uses pink
lipstick and prefers Kate Moss will never see Eva Longoria in black, she will
get the same 'campaign' messages, but dressed up as Kate Moss in pinkish
tones... This is co-creation of marketing messages. This is the very heart of
Engagement Marketing. This is why in only a few steps, the marketing can become
highly appreciated and personal and beloved. And we haven't gotten to the good
part yet. Lets do message number 3.

BEGGING FOR MORE ADS

L'Oreal has measured its Blyk user base and found that there are a lot of goths
in its opt-in database. And the clever marketing department execs at L'Oreal
dig into their consumer insights and notice that yes, the Goths seem to like
the Finnish rock band Nightwish. And so, when Nightwish does its next tour of
Europe, L'Oreal decides to sponsor the tour. And as sponsor, it gets 200
tickets to the opening show at Earl's Court in London. L'Oreal decides to
reward its fans on Blyk.

L'Oreal digs through the Blyk database and its opt-in users, and finds all
those L'Oreal opt-in fans who selected black as their lipstick color (are
likely Goths) and who also said they like rock music. And finds 2,000 such
teens in the system. L'Oreal sends a surprise message just to these 2,000 lucky
ones with an MMS message with Nightwish doing a short snippet of its latest
music video - and promises L'Oreal treats the first 200 of its Gothic rock fans
to free tickets of Nightwish at Earl's Court.

Girl 1 gets this message, opens it, watches the video in deep entrhallment -
remember both girls love Nightwish, how could L'Oreal know that this is their
fave band? - and after the videoclip embedded in the MMS, L'Oreal offers the
fastest to respond, FREE tickets to the opening night? The girl sends her
response immediately.

Notice what happens. The system learns ever more accurately what we want, and
then feeds us what we'd most prefer, and teaches us to react immediately, to
open the messages and respond fast. Pretty clever eh?

Now. If you are truly a fan of Nightwish and Eva Longoria and dress in black,
and your makeup brand has started to communicate with you using your fave
colors (black) and using your fave actress (Eva) and now gives you the chance
to win free tickets just by responding fast - you will LOVE this brand more
than anything you could imagine. The girl does not have to win the ticket today
to love L'Oreal for it.

What of her friend? They were both sitting at Pizza Hut. The BFF sees this
message coming on Blyk from L'Oreal with the Nightwish video clip. They both
watch it on the friends' phone, but this other girl is still waiting. The other
girl has already sent in her response to try to be among the fastest 200 to
win, but the best friend has not received this offer! Why not? She becomes
despondent. She calls up Blyk demanding her offer too.

Blyk tells her, that because she did not tell Blyk - and L'Oreal - that she
likes rock music, she will never be bothered with anything about rock music.
After all, she might prefer rap music or country music or jazz for all they
know. They will only send rock music ticket offers to those members who said
they like rock music. That this girl tried to 'game the system' by witholding
real opinions from Blyk will only harm her, not benefit her. She adjusts her
setting immediately and is served the L'Oreal offer within seconds thereafter.
She learns her lesson the hard way as her friend gets to go to the concert on
the ultimate free ticket...

This is truly textbook Engagement Marketing. Co-creation of the marketing communications
between the brand and the consumer. When we analyzed the Blyk traffic together
with Forum Oxford, we found that the average Blyk campaign had about 6 ot 7 of
these interactive steps back-and-forth, run for about a week or ten days, with
then about two weeks of silence, until the next such campaign ran again.

29% response rates. Consumers loving the ads so much, they beg for more. 2,600
such campaigns run by 200 of the biggest global brands in England just over one
year, loving it so much they ran on average 13 such campaigns per year. Why are
you not using Engagement Marketing today?

This is not a UK specific anomaly. The Blyk model has been successfully copied
from Croatia to Malaysia. Alcatel-Lucent's Optism runs on these principles.
OutThereMedia runs its opt-in mobile marketing on these principles. Blyk has a
million audience just in India alone, on these very same principles. Once you
go Engagement Marketing, you never go back.

E = M 2 C

That is how engagement marketing can be done today. Now lets go into the
future. What if you have your fans help co-create your brand, participate in it
and help decorate the most popular teen fashion magazine for girls? Lets
examine Girlswalker, ie Tokyo Girl of Japan. This is where engagement marketing
can bring you.

TOKYO GIRL

Girlswalker starts off as a standard teenage fashion magazine for girls. It
gives advice on what to wear, makeup and of course, how to pick up the boys,
make relationships last etc.. Rather than the print magazine out perhaps once
per month, Girlswalker has two issues per week. They are smaller in content,
formated for the small screens of the mobile phone and have fewer articles per
issue. But over a month, you get about the same amount of magazine content as
you might on Glamour or Vogue or Seventeen or whatever is your fashion magazine
of choice. But rather than the paid paper-based print edition, Girlswalker
comes to the favorite device of the teens - their mobile phones - and is
totally free. We are right off with something better.

Then the content. There are normal teen-magazine articles
written by professional journalists. And there is plenty of make-up and fashion
dressing advice. Except.. that the pictures of the models in Girlswalker are
all genuine Tokyo girls, shot on the streets of the most fashionable steets of
Tokyo. Quite literally this fashion mobile magazine is up-to-date, it shows
this week what real Tokyo teenage girls are wearing this week (twice per week).
There are no supermodels featured in Girlswalker, only genuine Tokyo teens.

And the next point, while yes, the audience of Girlswalker includes of course,
the Tokyo teens, its target audience is.. the rest of Japanese teenage girls
who don't live in Tokyo. The girls in Osaka and Kyoto and Sapporo and any towns,
villages and rice farms along the way. The girls who would want to be as cool
and sexy and glamorous as the Tokyo girls.

So? To pay for the free mobile internet based magazine, how do you monetize it?
Two ways. You have the freemium content which more than pays for the
publication. About 10% of the teens pay about 2 dollars per month for the
premium edition. It enhances the standard free content with longer articles,
more pictures and of course.. videos. If the free magazine offers ten tips to
keep your romance hot, on the premium edition you get 20 tips, etc. And then there is the super-VIP edition,
which includes all the premium content but adds super benefits such as free
access to the twice-annual fashion shows with the hottest new fashions modelled
on the catwalk by, not supermodels, but rather, yes, the hottest girls from the
pages of Girlswalker.

Now the kicker. The advertising. Tokyo Girl advertising is relevant and
personal to the tastes of the reader and highly appealing. What happens? Alan
Moore reported in his book No Straight Lines, that Girlswalker ads achieve, on
average.... (wait for it...) ... 45% redemption rates! Not 'click-through rates' or even 'response rates' but 'redemption rates' - actual money purchases generated per ad view! 45% redemption rates? That is the holy grail of advertising! We know exactly which ad generated what sales and nearly half of the targeted (obviously already opt-in) ads get nearly half to produce sales? You, the CMO of your Fortune 500 corporation stop all TV, radio, print and other ads instantly when you see this number. Gosh. Yes, if 10,000 girls saw
that one blouse advertized by Zara in this week's issue, then 4,500 blouses
were sold directly from that ad! Who gets 45% redemption rates? This utterly
obliterates the 'efficiency' of shotgun advertising such as TV ads. For every
100 ads seen, 45 actual paid purchases result ! This utterly remakes the total
print industry - and ad industry, it goes without saying.

Girlswalker ad rates have skyrocketed and today an ad in the current issue
costs more than an ad on television in prime time in Japan. And how is this
possible? Each issue has only a few ad slots and they are auctioned to the
highest bidder, of course... As a consequence, Girlswalker the media empire is
ridiculously profitable.

And let me just mention where does this all go 'next' - now Tokyo Girl has its twice-annual fashion shows - so immensely popular (only to Platinum level members) they are booking sports arenas that get filled by teenage girls. And the mobile commerce involved? Get this - when the girl in the audience likes something the Tokyo Girl walking on the catwalk is wearing, she only points her phone at the model on the catwalk, and selects which item from the girl she wants (the skirt, the shoes, the handbag, whatever) and clicks to buy. The system already knows this users size so no other info is needed. Point-to-buy convenience - at a fashion show! Truly to be first in your neighborhood to wear the latest fashions, just like a proper Tokyo Girl. Wow. This is the future of retail. (oh, and the magic in point-and-buy tech? Its not location-based, its time-based. They just know which model is currently on the catwalk, you could point your cameraphone at the toilets, and it will still offer you that Hennes & Mauritz silk scarf in pink and silver... :-)

WHILE IN CANADA

And I just read only the headline finding from Canada, from Coca Cola's latest
campaign. They ran a global campaign across many media, TV, print, web and
mobile. They had several mobile elements to it from QR Codes to mobile web to
smartphone apps, but at the epicenter of the campaign was SMS text messaging
and a deeply engaging advertising concept. The result? 45% of the target
audience responded and engaged with the campaign ! It can be done, not just in
Japan but if even the usually laggard Canada (which has yet to even pass 100%
mobile phone penetration rates, where several countries have already passed
200%) can do it, you can do it in your country.

SO ITS LOCATION?

So whereas Engagement Marketing was the first totally new advertising concept
native to mobile (earlier mobile ads were all copies of previous media, such as
banner ads, spam emails and location-based ads.) You thought Location-based ads
- like say FourSquare - are new? Far from it. LBS ads were invented for the
third mass media - Cinema, yes Cinema has had those 'near this cinema' type of
restaurant ads for nearly a century now. And their success is a good precursor
to how poorly LBS is performing today. A Nielsen survey in December 2012 found
that 10 million Americans are active users of FourSquare. While 10 million
looks like a big number for many in other media like print, 10 million is
peanuts in mobile. Thats only 3% of American cellphone owners! Thats nothing.
Don't focus on Location, its a red herring. Focus on the 9 unique aspects of
mobile to build your market success.

THE NINE UNIQUE ASPECTS OF MOBILE AS A MASS MEDIA CHANNEL
1 - Mobile is personal

When the first TV ad was developed, it was a Bulova watch ad
in the USA. It was like a newspaper ad, lifted from the print issue and
broadcast to the television screen. Yes, imagine a TV camera showing 30 seconds of a still image newspaper or magazine ad. It was a still image. An announcer read a voice-over of the
exact print copy seen on the black-and-white still image on the TV screen "America runs on Bulova time." Even the second-hand on the clock on the picture did not move. A still picture was broadcast for 30 seconds with what sounded like a radio announcer reading the same text that was displayed on the TV screen. BORING !!! That was it. No jingles, no
moving images, no smiling kids or happy dogs. And no drama, no comedy, no action,
no emotional involvement. That was not using the abilites of television and
such an ad would be camp if run today. I find a similarity to most mobile ad
campaigns or mobile elements to cross-media campaigns. They only copy older
less-efficient media, so mobile is severely underperforming. Use those nine
unique benefits to deliver better advertising performance than was possible
before mobile became the 7th mass media.

NEXT COMES AUGMENTED REALITY

Which brings me to the future. Augmented Reality, ie AR. I have been exploring
the use of AR as a unique ability of mobile, but today AR is spreading past
mobile, to tablet PCs, to Playstation Portables, and very shortly, to
goggles/glasses such as Google's Project Glass ie the Google Goggles. AR was
immediately embraced by advertising, from the iconic first Ford Ka ads in
Europe to the Ikea catalog made available via AR (So you can virtually test
furniture in your home, just by looking at the item through your cameraphone
viewer aiming the furniture to any room in your home).

AR is inherently interactive and very easily becomes fully engaging too. The
Ford Ka ads four years ago were famous for having live people step into the
camera view, to be pictured next to the virtual Ford Ka which did not exist in
reality, at that point. AR invites people to want to participate. A French
website, DirectOptic, has added AR based virtual trials to selling their
sunglasses and eyeglasses, to enormous gains. The visitors to the website who
use the AR feature have a 41% higher conversion rate than visitors who do not.
And the buyers who make a purchase and who used AR will spend 12.5% more than
those who didn't. So the total gains to DirectOptic from using AR are 45.6%
more revenues from the AR users.

Oh, if you don't really know or understand AR the 8th Mass Media (mobile was 7th, internet was 6th, TV was 5th) or perhaps doubt it can be a viable ad medium etc, you might want to watch my TEDx Talk about Augmented Reality last year. Its like all TED videos, short and snappy, and I have tons of AR media examples in it. See the video at Tomi Ahonen TEDx Talk About Augmented Reality.

OBAMA 2012

Then Senator Barack Obama Presidential campaign in 2008, run by David Axelrod,
set new standards for using mobile in US elections, from announcing his VP
choice by SMS, to the innovative Obama app for the iPhone. In 2012 his
re-election campaign run by Jim Messina turbocharged all they had learned, from
getting donations directly by one click via SMS to this, perhaps the ultimate
'force multiplier' in the history of elections.

Obama's campaign had used digital and social media very effectively and had for
example recruited 311,000 volunteers for election day (compared to 34,000 that
Mitt Romney's campaign had recruited). Messina had assigned 200,000 volunteers
to phone duty on election day, who placed 11 million phone calls to voters.

Lets explore this a bit. Obama's total vote total was 65 million, so about one
in six Obama voters received a phone call on election day to remind them to
vote, and remember, 29% had already voted before that day. The campaign knew
who were true Obama supporters - they didn't robocall districts without focus,
and didn't hit Romney supporters. So only 46 million Obama supporters voted
actually on election day, and thus, the campaign reached nearly one in four who
voted that day. (They also made another 6 million personal visits knocking on
doors on election day, and used obviously all other activation methods from
Facebook and Twitter reminders to more traditiona emails and mailers). But here
is the sweetest part.

As the Obama 2012 campaign had gone through the trouble to
collect mobile phone numbers and permissions - and personal info into a monster
database called Narwhal. They had permissions. They had the mobile numbers. And
they knew who was a nurse, who was a retired Marine Master Sergeant and who was
still a student at the local community college etc. Plus they knew who had
voted and who had already been contacted personally on election day. So they
built the ultimate engagement campaign.

Every registered Obama supporter with a mobile phone who had given permission,
received an SMS text message early on Tuesday election day with one question:
'Would you be willing to make one call to an undecided voter, on behalf of
President Obama today?' Remember the campaign already knew this person was an
Obama supporter and that this person had already voted that day or before. Now
they were not asking for money - at that point the campaign was awash with
cash, they needed volunteers to 'turn out the vote'. And if the same ratio of
support for this SMS campaign occurred as they reported for their Facebook
campaign (they didn't reveal the SMS campaign effectiveness, which I believe
was far stronger, but lets use the FB stat as the reference) then of the 24
million Obama voters who said they had been contacted by the campaign (by voter
polls after the election) if we assign the 8% rate of activation as on FB, it
means 1.9 million bonus volunteers made an extra phone call on behalf of
President Obama on election day.

So the campaign, by sending out 24 million SMS text messages at perhaps 2.4
million dollar total cost, achieved 1.9 million more calls, in addition to the
11 million their army of volunteers produced. And for contrast, the Romney
campaign volunteers didn't even try personal calls, they only made Robocalls
(Recordings, like Donald Trump endorsing Romney and encouraging people to vote
for Romney). The Romney campaign made a total of 6 million Robocalls on
election day, of which only 3.1 million hit Republican voters who had not yet
voted on that day. Obama's SMS based mobile gimmick did more than half that
level - with personal calls, a laid-off factory worker calling another factory
worker, a teacher calling a teacher, a retired housewife calling another
retired housewife, etc. This is the very essense of Engagement Marketing,
performed to brilliance by the Obama campaign. I expect when the final analysis
is done and reported, the SMS-volunteering 'would you make one call for the
President' message will go down as one of the most cost-effective election day
activation methods ever devised. But it required permission, careful engagement
over time - the average Obama supporter had been personally contacted 5 times
during the 2012 election season, by personal visits to the home or personal
phone calls, in addition to countless SMS text messages, emails, Facebook and
Twitter contacts, YouTube viral videos etc. (and for those who want to see the inside scoop on Obama's data mining edge and all the numbers of the Narwhal vs Orca battle of voting databases in 2012, my full stats and analysis is here)

That is how you build an Engagement Campaign, and how you use it. Remember what
Alan Moore teaches, people embrace what they create. Let your consumers
co-create your marketing experience with you.

So when you consider your next campaign with mobile, lets
take the lessons from Alan Moore, Jonathan MacDonald and Agustin Calvo, from
examples pioneered by Lego, Seeda, Lays Potato Chips, Blyk, L'Oreal,
Girlswalker, Ford, Coca Cola and the Obama Campaign. Don't just interrupt your
audience, respect them and ask for permission. When you do create your mobile
marketing, do make it interactive and viral, of course, but make it also
engaging. Remember Agustin Calvo's formula, Engagement = Mobile To Community. E
= M2C.

WHERE NEXT?

So yeah, obviously if you want or need, I do these kinds of
workshops all around the world for my clients and I'd be delighted to prepare a
workshop or seminar for you about Engagement Marketing and/or other mobile
media, mobile advertising, viral marketing, mobile money, Augmented Reality
etc. While I'm not a mobile advertising specialist, I did chair the world's first conference on mobile advertising 13 years ago, I was the first author to discuss mobile marketing at chapter-length in a book, each of my twelve bestsellers includes mobile advertising and one of my books was completely focused on this aspect of the mobile industry. Yes, I am regularly used by big ad agencies, national advertising associations etc to run workshops and do seminars, but seriously, I am an expert on the mobile industry overall, that covers anything from youth messaging to farming irrigation systems, from mobile money to smartphones, from mobile gaming to international voice call roaming, and from MVNO profits to SIM card loyalties. I am not your expert on mAd as in Mobile Advertising. So this is not about me. Who are your best resources whose day job is purely mAd and who are my gurus into this specialist area that is one of the fastest-evolving ever seen in media history.

If you want to really learn Engagement Marketing there can
only be one man for that, its the guy who invented the concept and has thought
about this the longest and done it the most, and that is Alan Moore the CEO of
SMLXL out of Cambridge UK.

But there are several superb experts and gurus who have mastered Engagement
Marketing and who do it in their daily work and are excellent guides for you. I
am not an advertising dude myself, so I don't know all who now are the best at
this craft, but here are my favorites who do know what they are doing and would
be excellent guides for you on your journey from interactive digital marketing
to Engagement Marketing. There is JMac, Jonathan MacDonald, of course, the
author and guru from Britain. There is Agustin Calvo the author and former
mobile ad agency CEO from Spain. Then I'd add the American, Kim Dushinski, the
author of the wonderful Mobile Marketing Handbook (now in its Second Edition,
make sure you buy the new version, not the first edition). I have to add my
first guru into the world of advertising and mobile merging, the Finnish grand
old man of digital media, Antti Ohrling. We also have to remember Kerstin
Trikalitis of Out There Media who is very active here in Asia, and the author Peggy
Anne Salz of Mobile Groove, based out of Germany. And I'd be remiss to ignore
my dear friend Rory Sutherland of Ogilvy in Britain or another dear friend, author
Russell Buckley, the past CEO of the MMA previously with Google and Admob who
lives in Germany. Lastly I'd add Richard Ting of R/GA out of New York. I know
there are at least a dozen more truly world-class experts in Engagement
Marketing, but these are people I know, whose work and writing I follow, who
are behind award-winning concepts and campaigns, who really know what is
Engagement Marketing and what only pretends to be that.

ABOUT YOUR CAREER

Let me end with a different view. I know for some who have
an illustrious career in advertising and a wall full of awards, the concept of
yet another digital miracle cure to advertising may seem like all hype and no
hope, and a massive intrusion into the world they know and have mastered.
Nobody taught this Engagement Stuff at university, and isn't it just a tired
old refrain of what we learned with the internet or now see in social media?
There is an inbuilt resistance to all things new, and even more, one that might
threaten the livelihood, and one where older experts seem out of touch and the
youngest in the industry seem more knowledgable. A lot of veterans in the
advertising industry - including often the bosses - will resist the change.

The worse problem is television. Currently the ad industry
global awards are all TV oriented. The money in the advertising industry is
disproportionately geared to television where ad deals often get a percentage
cut of TV ads placed, and that is big money. If you go to your ad agency and
ask for a cross-platform campaign, they will always pitch TV in it, whether TV
really works or not. And just watch what happens if you, the client, announce
that you want the other parts but lets not do TV this time? The best team will
not work on your campaign! The best teams want the TV stuff, because thats the
fame and glory bit, thats how you win your awards and perhaps get to go to
Cannes etc.

The problem is, of course, that TV viewing is not increasing anymore, it has
plateaued. TV ads are seeing ever less efficacy, due to TiVo and other PVRs and
consumers viewing content in other ways to avoid the ads altogether. That
means, the most attractive audiences are increasingly avoiding the ads, and
ever less attractive parts of the TV viewing audience - like the poorest
segments in that country - are left to aim ads at.

Meanwhile, the disparity with our media use of mobile is totally out of
proportion to the miniscule ad spend on the media so far. And most of that ad
spend is the pointless spam messages and annoying banner ads and interstitials
etc. So many ad execs will point to the unfulfilled promise - arguably
disappointment - of mobile ads, and go again to work on the next TV ad
campaign. Contrast that with successful mobile ad campaigns. A well designed,
opt-in, engagement marketing campaign will be delivering well in excess of 25%
response rates and usually well above 30% rates, in any country, from England
to Egypt, from Croatia to Canada, from Spain to Singapore, from South Africa to
South Korea.

Some creative types at ad agencies will 'get it' that as the mobile is the most
personal, most sensitive and private media channel, and the screen space is so
limited, and our attention span to the medium is often divided - we multitask
often when we consume mobile media - the challenges to creating a successful mobile
ad campaign are far greater than doing that on a magazine or billboard or radio
or TV. The challenges are greater on mobile than on the web. The challenges are
greater, the rewards are potentially huge. For any truly creative mind, this is
the best kind of opportunity. A new media channel with massive reach and
enormous potential, that most rival creatives do not fully understand! This is
where careers are made.

I think there will be primarily two types of advertising professionals this
decade, those who embrace mobile with a passion, putting it dead-center into
everything; and those who resist 'the dark side' and try to remain with the
more familar legacy mass media - which yes, today, includes the web. Yes, the
internet is now a legacy mass media that is no longer the cutting edge of new
and cool. Where would you rather be? Which brings me to a few closing thoughts.
Google, the world's biggest internet company and world's largest web
advertising company has been saying for years, that mobile is the future of the
internet.

MOBILE MOVES TO MIDDLE

Ford was the first major advertiser to commit to making mobile part of every
campaign they run across any media. Coca Cola now puts mobile to the center of
their campaigns. Visa goes even further, saying mobile is the future of
payments too! And Kraft the US food giant gives its simple mobile philosphy,
'Leave no phone behind' when they advise their partners and audiences that any
mobile ad campaign should start from SMS and then build out from that with MMS,
QR, mobile web, etc long before you bother with such tiny niche audiences as
individual smartphone platform apps. Coca Cola puts it in their inimitable way,
with their famous 70:20:10 rule, put 70% of your mobile budget to mobile
messaging, only 20% to mobile web, and 10% to all others including smartphone
apps, Augmented Reality, etc.

Thats my primer on Engagement Marketing. I would be very interested to hear
your thoughts (and please, I know many of my readers obsess about the
smartphone races, this comment thread is closed to smartphone discussions, I
will only allow discussion about advertising and marketing here, not the usual
iPhone vs Android debates or what becomes of Nokia next). And if you want to see how we are now using mobile in media, advertising and retail, you might enjoy my video in Rotterdam at the end of the year when I gave a keynote to the Emerce Day about Mobile and eBusiness.

January 02, 2013

If you really want to cry about how badly Nokia has been
mismanaged, go and re-read the Form 20-F that Nokia filed shortly after Nokia's
new CEO Stephen Elop announced his surprise strategy and turned the strongly
growing, profitable, market-dominating handset maker into the diminishing,
loss-making, loser it is now. Oh? You didn't read the Form 20-F which Nokia
Corporation filed with the USA Securities and Exchanges Commission on 11 March,
2011? I did. At the time I remarked how many of the possible problems that
Nokia warned might come true, I was in fact already convinced would also come true, and now we see from the evidence, that they also have indeed come true.

So? If we want the truly honest measure of Stephen Elop's CEO tenure, his
radical strategy, and measure is it working or not - this is Nokia
Corporation's own statement to the USA Securities Exchange Commission and the
New York Stock Exchange, about its radical new strategy, and what all might go
wrong. This is not my suggestions of why or how we should measure Nokia's
success or failure, this is Nokia's own statement, issued during Q1 of 2011,
after the new strategy was unveiled on 11 February 2011. Please also note, this
is a very long article, that is not my fault, I only selected a FEW of the main
risks as identified by Nokia in the Form 20-F. If Nokia had decided not to
pursue such a risky strategy two years ago, I wouldn't need to write such a
long article. This whole article is only around Form 20-F and the risks that
Nokia itself identified as threatening the Windows strategy. Yes, there are plenty of OTHER mistakes that Elop has also done since then, but we will limit this blog only to Form 20-F. These are the problems that Nokia itself identified. So get yourself a
cup of coffee before you embark on this long blog but if you are interested in
can Nokia (or Elop) survive, read this blog and how Nokia itself identified its
risks with Microsoft.

FORM 20-F STATES CLEARLY WINDOWS
STRATEGY IS FULL OF RISKS

In the filing, Nokia Corporation told us how long the transition to the new
strategy would take "We expect the transition to Windows Phone as our
primary smartphone platform to take about two years." The exact
two-year milestone will be on 11 February, 2013, in about 40 days from today. I
expect many business, telecoms and strategy writers to re-examine the Nokia
failure in its Microsoft strategy at that point. Lets now use Nokia's own
standard for how to measure success or failure of its strategy, as Nokia told
us in the Form 20-F.

Nokia warned that if the Nokia strategy with Microsoft were to fail, most
likely Nokia would then become a low-margin box-mover basic handset maker (hey,
thats what I said on Twitter within minutes of this strategy first revealed).
This is what Nokia wrote:

Our proposed partnership with Microsoft and change in our smartphone
platform strategy are subject to certain risks and uncertainties, which could,
either individually or together, significantly impair our ability to compete
effectively in the smartphone market. If that were to occur, our business would
become more dependent on sales in the mobile phones market, which is an
increasingly commoditized and intensely competitive market, with substantially
lower growth potential, prices and profitability compared to the smartphone
market.

So please understand - Nokia explicitly said if this Microsoft strategy were to fail in the two years period, that would leave Nokia as only a dumbphones-maker of very low-margin business. That this strategy in effect threatened Nokia's future as a smartphone maker. If the Microsoft strategy were to fail, Nokia would become a 'box mover' like Dell is in the PC market. Very low-margin, cheap dumbphone maker.

Lets get back to Form 20-F. After that, Nokia listed its perceived risks. And there were
many. Just general risks related to the Microsoft strategy produced 21 itemized
risks, before Nokia went onto specify hundreds more risks as they related to
the Symbian platform, the competitive 'ecosystem', differentiation, speed of
innovation, employee morale, etc etc etc. I am not going to take every single
item from the risks assessment, it would else produce the longest blog I've
ever written, and even on the holiday break, I am not about to do that amount
of writing. I will take some of the most obvious risks, as specified by Nokia,
and see how they panned out. Remember readers, this is not somehow 'Tomi
Ahonen's petty list of complaints'.. this is Nokia's official testimony, in its official filing to the SEC
and NYSE about what may cause the Nokia Windows strategy to fail. This is
Nokia's own published set of 'failure standards'. Nokia told us how to measure
failure (or success) with its strategy. This is directly from the Form 20-F in
the explicit section 3D Risk Factors, where Nokia wrote in bold:

Our proposed partnership with Microsoft may not succeed in creating a
competitive smartphone platform for high quality differentiated
winning smartphones or in creating new sources of revenue for us. (bold in original)

WINDOWS WAS RISKY PLATFORM OF TINY SCALE

Nokia then gave a lot of text and explanation about the
changes in the smartphone market, and then listed explicit problems with this
lead in: "Our proposed partnership with Microsoft and change in our
smartphone platform strategy are subject to certain risks and uncertainties ..
those risks and uncertainties include the following:

• The Windows Phone platform is a very recent, largely unproven addition to
the market focused solely on high end smartphones with currently very low
adoption and consumer awareness relative to the Android and Apple platforms,
and the proposed Microsoft partnership may not succeed in developing it into a
sufficiently broad competitive smartphone platform.

So now we know. When this strategy was announced, the
Windows Phone platform had a 2% market share and as of the latest quarterly
data reported, all Microsoft based smartphones, running both Windows Phone and
its older Windows Mobile version, had a combined market share of 4%. Today,
latest data from Q3 reveal that Windows on all platforms combined had a market
share of under 2%. Latest market data from selected major markets suggests
Windows Phone sales have suffered even more, and total Windows Phone market
share for Q4 may be rounded off to 1%. The Windows Phone operating system was
already sold and in production when Nokia selected this platform. Since then it
has shrunk in size. Nokia started selling Lumia based smartphones running
Windows Phone more than a year ago, so Nokia has now had more than a year of
contributing to the Windows Phone success. When this strategy was announced,
Nokia had 29% market share on its own operating systems. They are now down to
2%. So Nokia has sacrificed 27 points of market share of its own smartphone customers and that has
not moved the Windows Phone share up even one point of market share. This after more than a
year of Lumia sales. Absolutely, concretely, beyond a shadow of a doubt, the Windows Phone startegy for
Nokia has failed.

Then on the price. Windows Phone was and still is focused
only on the 'high end' of smartphones. When this strategy was announced, Nokia
average sales prices of its smartphones was 152 Euros (190 US dollars). Informa
has just reported that for year 2011, the average price of smartphones globally
was 188 US dollars. Earlier, Deloitte had calculated that 300 million ie 41% of
all smartphones sold in 2012 will cost under 100 US dollars. Nokia's Symbian
was well suited to provide smartphones into the low-cost segment. But Nokia's
Lumia series, the Windows Phone based smartphones had an average sales price of
160 Euros (200 US dollars) and the first set of the newest 'second generation'
Lumia smartphones that run Windows Phone 8 have an average price of 570 Euros
(717 US dollars). Nokia knew when announcing this strategy that the prices of
Microsoft based smartphones would be a risk. We have now seen, that as the
market has moved down in price, Elop's strategy has pushed Nokia into the
implausible business case level. The Windows Phone Lumia series is priced far
too high to sell in the volumes Nokia needs. Which is why for each release, almost instantly, within weeks of launch, the Nokia prices for Lumia handsets have collapsed. So happened a year ago now, with Lumia 800. So happened with the Lumia 900 last spring. So happened already now for the brand new Lumia 920!! The prices have been slashed because nobody wants these Lumia phones and Nokia has to move undesirable phones so they slash prices.

WINDOWS LIMITED NOKIA ABILITY TO DIFFERENTIATE

• Our ability to innovate and customize on the Windows Phone platform may
not materialize as expected to enable us to produce smartphones that are
differentiated from those of our competitors.

Yes. So far we've seen 9 Lumia models, which are all near
clones of each other, and arguably, all are clones of the original iPhone, via
the iconic design of the Nokia N9 that runs on MeeGo. There are no premium
camera models like has been famous for ever sinc the award-winning N93 with
real optical zoom, or the award-winning N8 that had a 12 megapixel camera, real
Xenon flash, etc, that ran on Symbian; or now, the award-winning 808 Pureview,
which has the monster 41 megapixel camera, real Xenon flash etc, that also runs
on Symbian. Even the top Lumia 920 does not even match the N8 for camera sensor
size, with Nokia's top flagship severely regressing to 8 megapixels, the level
where most rivals are, and leading rivals have long since moved to bigger
camera sensors. Nokia has a strategic partner in Carl Zeiss and yet under
Elop's Microsoft strategy, Nokia's Lumia series has been unable to capitalize
on Nokia traditional strengths, and abilities that Nokia customers expect. A
2012 survey of Nokia smartphone buyers by Nokia, published at Nokia's website,
revealed that when coming to replace their phones in 2012, the number 1 request
Nokia loyal existing customers had was the camera. And what do we now see? Samsung has taken the top cameraphone specs crown with the brand new Galaxy Camera. Why, if Nokia knows this from internal consumer surveys, would Nokia voluntarily abandon this competitive advantage - to Samsung no less?

Similarly QWERTY inputs. Nokia invented the full QWERTY input method for
smartphones long before there was a Blackberry. The last data Nokia revealed
before Elop came to run the company, was that for the year 2009, 27% of Nokia
smartphone buyers selected the E-Series which was essentially all QWERTY
handsets (there also were other Nokia smartphones with QWERTY keyboards). So
Nokia has millions upon millions of satisfied loyal customers who want a
smartphone that is differentiated from the iPhone and some of those love the
real physical QWERTY keyboard. Nokia even sold a separate Bluetooth-based foldable
QWERTY keyboard for those who wanted to have a larger keyboard for their
smartphones. Bizarrely, the Lumia series does not even support the foldable
Bluetooth keyboard and not one of the nine Lumia models released so far has a
QWERTY variant. Elop has admitted that there have been 'debates' inside Nokia whether to release QWERTY variants. As we know every major Nokia flagship recently on Symbian and MeeGo have had QWERTY variants like the E7 to the N8 and the N950 to the N9, but there is none for Lumia, we can see which side of the 'debate' Elop has been on. He is a moron. Nokia's own customers beg for QWERTY variants, yet the Microsoft Muppet won't give us any on Windows Phone. And worse - if he won't do one on the Lumia series, then what moment of madness was that 'decision' not to sell the N950 with MeeGo, after the N9 was winning all the awards and had massive sales success a year ago? Why not then release at least the N950 on MeeGo if Elop didn't want to do a Windows based QWERTY Nokia superphone? Idiot!

Nokia was able to differentiate very broadly with its Symbian
OS, and the Maemo and MeeGo advanced smartphone operating systems. But with
Windows, Nokia has not been able to differentiate. Not against other platforms,
not even against other smartphone makers on Windows Phone platform. Nokia's
Microsoft strategy has comprehensively failed in a critical ability for Nokia
to build scale and volume and win market share, because the Lumia series and
Windows Phone do not allow Nokia to differentiate. Nokia's ability to differentiate
was promised to increase with Windows. It has been severely curtailed instead.
Early Windows Phone models did not even support NFC, a feature Nokia had
started to roll out on its top end Symbian and MeeGo devices. Who only increases their differentiation, across Android, bada and Windows platforms? Samsung thats who? Differentiation and a broad product portfolio gives you reach and scale. Nokia knew that before Elop came to town. But Elop has refused to allow that now. Elop only wants to make i-Phon-a-Clones. Before Elop, Nokia never had Apple iPhone-envy. Elop contaminated Nokia and now it seems the Lumia series is all but cheaper-looking plasticky iPhones.

WINDOWS IS SIMPLY NOT COMPETITIVE IN GLOBAL MARKET

• The Microsoft partnership may not achieve in a timely
manner the necessary scale, product breadth, geographical reach and
localization to be sufficiently competitive in the smartphone market.

Scale? Nokia sold 103 million smartphones in 2010. That
refleced a growth level of 53% from 2009.Every single analyst who during 2010
published a forecast for Nokia performance into 2011 and/or 2012, said with
total confidence that Nokia's then-current Symbian (and MeeGo) based strategy
would yield solid growth into 2011 and 2012, and every single published handset
industry analyst was convinced Nokia would remain the world's largest
smartphone manufacturer in 2011 and 2012. Every single analyst was convinced.
The scale Nokia was expected to hit would be about 130 to 140 million
smartphones for 2011 and 170 to 200 million for 2012. That is the scale that we
are looking at, that Nokia was prepared to support, with the world's largest
factory capacity to produce smartphones, spread across 7 factories around the
world, including the world's largest handset factory facility, in China. Nokia
had the massive sourcing ability to buy components at bulk discounts. Those all
depended on Nokia's ability to continue to grow.

Instead of Nokia growing from 103 million in 2010 to about 135 million in 2011
and about 185 million now in 2012, what
happened, right after Elop announced his Microsoft strategy, Nokia smartphone
sales collapsed to 77 million in 2011 and 35 million in 2012 and something like 20-25 million in 2013. Nokia has
absolutely failed to "achieve in a timely manner the necessary scale to be
sufficiently competitive in the smartphone market.:." In the latest Q3 results,
Nokia's smartphone unit generated a 48% loss per every smartphone it managed to
sell! 48% loss per handset. When Elop announced this strategy, Nokia's
smartphone unit was healthy and reported growing profits from 9.3%
profitability before he took over, to 12.5% in the first full quarter he was in
charge. Elop's strategy has exchanged 12.5% profit for 48% loss. This is total
comprehensive failure, and it stems from the fact that his mad strategy cannot
sustain the level of volume that Nokia needs just to remain viable.

USA FAIL AT EXPENSE OF CHINA SUCCESS

• The Microsoft partnership may erode our brand identity
in markets where we are strong and may not enhance our brand identity in
markets where we are weak. For example, our association with the Microsoft
brand may impair our current strong market position in China and may not
accelerate our access to a broader market in the United States.

Duh! China is the world's largest smartphone market,
accounting today for almost a third of all smartphone sold. Nokia had over 70%
market share in 2010 in China's smartphone market according to Canalys and 6.8%
market share in the USA smartphone market in 2010 according to Kantar. After
the Microsoft strategy was announced in 2011, Nokia's China market share has
fallen to 6% according to Canalys Q2 data for China, and was that achieved with
any corresponding growth in the US smartphone market? Kantar reports that
Nokia's Symbian and all Windows Phone (which includes HTC, Samsung and other WP
manufacturers) total market share in the US market is now 2.9%. The Chinese
market was sacrificed achieving a LOSS to the USA market in return! Yes, the numbers do not lie. Before Elop's Mad Microsoftian Misadventure, yes using 'obsolete' Symbian, Nokia had nearly 7% of the USA smartphone market and over 70% of the far bigger Chinese smartphone market. Since then the US market has grown a little but the Chinese market has grown massively. And in both markets Nokia has collapsed. This is a totally,
comprehensively failed strategy. A December survey of Chinese online sales
found that Nokia's Symbian based N8 and 808 Pureview were among the top 5
besteselling Nokia smartphones and the N9, which runs on MeeGo was the second
bestselling Nokia smartphone in China. Why is the idiot CEO forcing the utterly
undesirable failing Windows based smartphones to the market where Nokia's
Symbian is well entrenched and MeeGo is beloved?

NOKIA ABANDONED ITS ADVERTISING UNIT

• We may not succeed in leveraging the Microsoft
advertising assets to build and achieve the required scale for a Nokia based online
advertising platform on our smartphones that generates new sources of advertising based revenue.

Among his desperation moves, Elop sold the Nokia advertising
unit, while global mobile advertising is doubling year after year after year,
and Nokia had one of the most used mobile advertising platforms of the planet.

WINDOWS DEMOLISHED ANY PROFITS IN SMARTPHONES

• We may not succeed in creating a profitable business
model when we transition from our royaltyfree smartphone platform to the
royaltybased Windows Phone platform due to, among other things, our inability
to offset our higher cost of sales resulting from our royalty payments to
Microsoft with new revenue sources and a reduction of our operating expenses,
particularly our research and development expenses.

Duh. Nokia generated 12.5% profit per smartphone sold when
Elop was only executing the Symbian/Maemo/MeeGo based strategy he was given.
After he foolishily abandoned that, today Nokia's smartphone unit reports 48%
loss generated per every smartphone sold. Yes, its clear, the new strategy was
not able to create a profitable business model. The new strategy has
comprehensively failed. Spectacularly failed. I cannot think of any industry
ever, where a global market leader went from 12% profits to 48% losses in a
period of less than two years (while the industry itself continues to be highly
profitable, so excluding world economic downturns, wars, natural disasters etc)

Note - this is EXACTLY the same problem with Windows that
has previously been observed by LG, Motorola, SonyEricsson and HTC - that out
of all smartphone operating systems and 'ecosystems' the Microsoft one is the
only one that is always the unprofitable one, and anyone who attempts to use
Windows as the primary operating system will only be plunged deeper into losses
(as observed by LG, Motorola and HTC, all who after attempting Windows as the
main OS, soon thereafter shifted their majority (and then all) smartphones to
Android instead. Windows is known to be the loss-making platform. Everybody
knows this. Only a Microsoftian Madman would insist, after two years of damage
and devastation - and ever increasing losses in the smartphone unit - come on,
Nokia was generating increasing profits at 12.5% exaclty two years ago using
Symbian, now when roughly half of all smartphones run Windows at Q3, Nokia
produced 48% loss per every smartphone sold.

PATENTS

• We will need to continue to innovate and find
additional ways to create patentable inventions and other intellectual
property, particularly as we would no longer be developing the core platform
technology for our smartphones under the proposed Microsoft partnership. As a result,
we may not be able to generate sufficient patentable inventions or other
intellectual property to maintain, for example, the same size and/or quality
patent portfolio as we have historically.

If Patents are so valuable, why is idiot-CEO Elop selling
key patents to trolls (and is it not a criminal offense for a Nokia CEO to gift
Nokia patent rights to Microsoft when selling some of those rights to the
patent trolls. Elop must be investigated for this and any illegal
patent-transfer contracts must be revoked)

OPERATORS, DISTRIBUTORS

• The proposed Microsoft partnership may cause
dissatisfaction and adversely affect the terms on which we do business with our
other partners, mobile operators, distributors and suppliers, or foreclose the
ability to do business with new partners, mobile operators, distributors and suppliers.

Touche! Nokia expresses in bold in Form 20-F how vital this
is for Nokia survival. Nokia writes:

Our ability to maintain and leverage our traditional
strengths in the mobile product market may be impaired if we are unable to
retain the loyalty of our mobile operator and distributor customers and
consumers as a result of the implementation of our new strategy or other
factors. (bold in original)

Nokia further explains how much this is a true competitive
advantage and key to Nokia long-term market dominance:

We have a number of competitive strengths that have
historically contributed significantly to our sales and profitability. These
include our substantial scale, our differentiating brand, our worldclass manufacturing
and logistics system, the industry’s largest distribution network and our
strong relationships with our mobile operator and distributor customers.
Going forward, these strengths are critical core competencies that we will
bring to the proposed partnership with Microsoft and the implementation of our
Windows Phone smartphone strategy. Our ability to maintain and leverage these
strengths also continues to be important to our competitiveness in the mobile
phones market. (bolded emphasis added by me)

As
discussed above, however, the proposed Microsoft partnership and the adoption
of Windows Phone as our primary smartphone platform are subject to certain
risks and uncertainties. Several of those risks and uncertainties relate to whether
our mobile operator and distributor customers and consumers will be satisfied
with our new strategy and proposed partnership with Microsoft. If those
risks were to materialize and mobile operator and distributor customers and
consumers as a consequence reduce their support and purchases of our mobile
products, this would reduce our market share and net sales and in turn may
erode our scale, brand, manufacturing and logistics, distribution and customer
relations. The erosion of those strengths would impair our competitiveness
in the mobile products market and our ability to execute successfully our new
strategy and to realize fully the expected benefits of the proposed
Microsoft partnership. (bolded emphasis added by me)

(Wow. This is like text lifted from my blog! I have been
writing here until I was blue in the face, how vital it was for Nokia to
maintain strong carrier relationships and maintain positive dealer
relationships, and I have chronicled here how much Elop's actions have damaged
those relationships.)

On May 31, even before the first full quarter of Elop's new
strategy was in place, Nokia stunned its investors with a profit warning. Elop
admitted being surprised by how much Nokia had been damaged by his statements
and Nokia said in its press release on 31 May about the profit warning that the
main reasons why Nokia was suddenly unprofitable were:- the competitive dynamics and market trends across
multiple price categories, particularly in China and Europe;- a product mix shift towards devices with lower average
selling prices and lower gross margins

So, as of May 2011, the CEO had seen that his strategy is
having severe backlash in China and Europe. At the Q2 results, Elop wrote
"In Q2, our immediate action to manage unexpected sales and inventory
patterns enabled us to create healthier sales channel dynamics." He also added "Most notably we
took action in China and Europe. We have shifted our sales focus and marketing
resources more towards retail interactions with consumers. We made changes in
certain critical sales management."

CAN ELOP FIX PROBLEMS AT NOKIA?

In the Form 20-F Nokia tells us that the carrier/operator and distributor support is vital for the strategy to succeed. So explicitly, that if operator/carrier and distributor support is lost, the strategy will fail. Then immediately at the first profit warnings only weeks after filing Form 20-F, and then a few weeks later, at the first quarterly results under the new strategy, Elop starts to complain about lack of sales support. But he promised he will fix it immediately. Stephen Elop, CEO of Nokia has identified an existential threat to Nokia's strategy. He has publically committed to fixing the problem with operator/carrier and distributor sales support. He has had 18 months to fix that since. How has Elop
succeeded?

Just before he announced his strategy, in Q4 of 2010, Nokia sold
33.5 million handsets in Europe and 21.9 million in China. When Elop reported
that his biggest problem driving growing-profits Nokia to sudden loss-making,
was China and Europe, for Q2 of 2011, Nokia European sales fell by 45% down to
18.4 million units and China (the world's largest handset market) Nokia sales
fell 49% to 11.3 million units. So, Elop announced that he understands the
issue and will fix it. Elop was attributed in The Wall Street Journal saying
"Nokia needs to streamline its distribution channel and ensure
profitability in the region, where local operators such as China Telecom and
China Mobile are playing an increasingly active role in determining the range
of handsets available."

When the Q2 results were released in July 2011, Elop said
"The challenges we are facing during our strategic transformation manifested
in a greater than expected way in Q2 of 2011." So in other words, his strategystumbled right
from the start. The problems ('challenges') were 'greater than expected'
already in Q2. So yes, lets now go see how well Elop has fixed these problems
15 months later. As of Q3 results 2012, Nokia sales in Europe have not
recovered, not even to the same level. They are now down another 9% to 16.8
million. And what of China, the world's biggest market? The Nokia brand has
utterly collapsed, falling another 49% and now Nokia only sells 5.8 million
devices in the market that is growing at breakneck speed.

Note - The new Nokia Windows strategy pushed Nokia away from
low-cost friendly Symbian smartphones to very high-cost Windows Phones. This
bizarre strategy was unveiled when the world market was already going faster to
lower-cost smartphones, and right after Elop announced his strategy, his
company fell victim to the truth. "Lower average sales prices". Has
Elop been able to recover from that since? In Q2 of 2011, Nokia's ASP was 56
Euros. By the end of 2011 (Q4) it was 53 Euros. Now, the latest data we have,
in Q3 of 2012 the Nokia ASP is 43 Euros. When Elop announced his strategy, his
mix of smartphones (high ASP) out of all handsets was 25%. Now, today, by Q3
data, as the world nears 50/50 split of smartphone migration, Nokia's migration rate from dumbphones to smartphones has regressed
towards the lower-cost featurephones, and is only at 7.5% !!! Before Elop took over, Nokia had every single quarter had safely better migration rate from dumbphones to smartphones than the industry average. Every single quarter (and doing that profitably). Now as he pushes Nokia away from smartphones, to dumbphones, Elop is very literally snatching defeat from the jaws of victory.

Most - MOST bizarrely, Nokia had been developing its
low-cost smartphone platform, called Meltemi, which was weeks from announcing
its first low-cost Nokia smartphones for the Emerging World markets like India,
Brazil, Indonesia, China etc - and Elop suddenly cancelled the whole project!
This is like if Sony - the master of portable music with the Walkman brand, had
observed Apple take big market share with the iPod, and then developed its own
MP3 player, and when it was weeks from launch - to truly address the way the
market is evolving, the Sony CEO suddenly kills the project. Weeks from launch!
Instead Elop is offering even more costly new Lumia smarphones now for
Christmas 2012, compared to those from last Christmas. He is like a madman who
looks at the world, sees its night time, and decides its daytime and refuses to
turn on the headlights of his car. Elop is acting 100% against the best interests
of his company, and 100% against the trends of the industry! Elop had 15 months to fix the existential threat to Nokia and has not even stabilized the problem, it just keeps getting worse. Nokia's CEO, Stephen Elop is not trusted by the carrier community/mobile operators & distributors. He has proven to be incapable of rescuing Nokia nor of restoring Nokia's strong carrier relations and distributors.

STAFF MOTIVATION

• The implementation of the proposed Microsoft
partnership may cause disruption and dissatisfaction among employees reducing their
motivation, energy, focus and productivity, causing inefficiencies and other
problems across the organization and leading to the loss of key personnel and
the related costs in dealing with such matters.

Yes. Tons have left.

REPLACED BY INCOMPETENT BUT MORE EXPENSIVE MICROSOFTIANS

• We may not have or be able to recruit, retain and
motivate appropriately skilled employees to implement successfully the Windows
Phone smartphone platform and to work effectively and efficiently with
Microsoft and the related ecosystem.

And worse, by allowing relatively low-paid long-term Finnish
employees to depart, and attempting to replace them - especially to take jobs
at Headquarters in cold Finland - by bringing in experienced West Coast talent
with Ex-Microsoft background etc, he is massively adding to the top-level
compensation all while replacing competent knowledgable experts with
unknowledgable outsiders who clearly do not understand Nokia nor its customers
nor its markets.

TABLET MADNESS

• We do not currently have tablets in our mobile product
portfolio, which may result in our inability to compete effectively in that
market segment in the future or forgoing that potential growth opportunity in
the mobile market.

Ah, the tablets madness. Yes, MICROSOFT may want a tablet,
it would be suicidally stupid for a pure handset maker like Nokia to launch a
tablet PC. The tablet market is very hard to get into, has a totally different
resale channel, pricing model, distribution chain and Nokia has zero brand
there. For any PC maker like Apple or Samsung, a tablet makes sense. For any
pure phone maker like RIM or Motorola - or yes, Nokia, a tablet would be utterly mad - as we can
see from how the Blackberry and Motorola tablets have struggled and plunged both companies into losses (killing Motorola in the process and almost bankrupting RIM too).

RATINGS DOWNGRADES NOW JUNK LEVEL

• The assessment of our proposed partnership with
Microsoft and new strategy could cause lowered credit ratings of our short and
longterm debt or their outlook from the credit rating agencies.

Ah, yes. Moody's, Fitch and Standard & Poors (S&P).
Yes. They might lower their credit ratings. At the time this strategy was unveiled, Nokia had emerged from the global financial crisis with a healthy profit-generating business where most of its rivals were producing losses, and the credit ratings agencies liked Elop and his early first five months of management by raising Nokia's credit ratings to one notch below perfect. One notch below perfect. And yes, Nokia warned that this new strategy might cause that sterling credit rating to be damaged. And you know what happened? The credit ratings agencies did in fact - each of them
downgraded Nokia - incidentially, citing Nokia distribution and sales as the
primary reason at every downgrade. Then they downgraded - each of them - Nokia again, citing what
as the reason? Again the sales and distribution problems. And they downgraded
Nokia again and again and again, sometimes as severely as two notches at a
time, until all three ratings agencies now rate Nokia as junk. Ah. Yes. If you
were near perfect by the ratings agencies, and in a period of just over a year,
you are downgraded so many times you are now junk - that is total failure of
your strategy and yes Elop has precided over the biggest strategic management
catastrophy of all time. If this was an earthquake in Japan causing a Tsunami and nuclear evacuation, that would be understandable. If this was an oil spill in the Gulf of Mexico, this kind of a series of ever worse downgrades would be (or could be) understandable. But what happened at Nokia was a totally unnecessary self-inflicted wound to Nokia, by the arrogant, ignorant CEO who refused to deal with reality and continues to live in some parallel universe of delusion in his mind. This series of Nokia downgrades was caused by the Elop Effect, and CEO Elop's inability to stop the sales erosion and carrier boycott. Which brings me to..

CARRIER BOYCOTT

Remember what Nokia testified to the SEC and NYSE in its
Form 20-F ? Nokia wrote the following

We have a number of competitive strengths that have
historically contributed significantly to our sales and profitability. These
include... the industry’s largest distribution network and our strong
relationships with our mobile operator and distributor customers. ...Several
of (the) risks and uncertainties (of the proposed Microsoft partnership) relate
to whether our mobile operator and distributor customers and consumers will
be satisfied with our new strategy and proposed partnership with Microsoft.
...The erosion of those strengths would impair our competitiveness in the
mobile products market and our ability to execute successfully our new strategy. (emphasis added by me)

At the Q2 results of 2011, how did Nokia report the carrier
support of the new strategy? "During the second quarter 2011, distributors
and operators purchased fewer of our devices across our portfolio as they
reduced their inventories of Nokia devices." (emphais bolding added by me) And specifically smartphones?
Nokia announced "the sequential decrease in our Smart Devices volumes was
driven by distributors and operators purchasing fewer of our smartphones during
the second quarter 2011 as they reduced their inventories of those
devices." (emphasis bolding added by me)

So how did Elop manage to fix this? Did he get the carriers
onboard to love the Windows strategy? Elop told the Nokia annual shareholders
meeting in April of 2012 (as reported by Finland's largest newspaper Helsingin
Sanomat, in response to a direct question of does Nokia have a distribution
problem, that: "If the operator
doesn't want us, it doesn't want us. We will appeal to them with other
arguments." (Note, quote is from Helsingin Sanomat, directly quoting
Stephen Elop at the Annual Shareholders Meeting). Elop openly admits Nokia has
now a severe problem with its operators/carriers and distribution. A year
earlier, in Form 20-F, Nokia proudly said it has "strong relationships
with mobile operators and distributors" which were the industry-best and a
clear competitive advantage Nokia held over all its smartphone maker rivals.

Now, a year after Elop's strategy, he admits to the Nokia shareholders meeting,
that yes, there is such a severe problem with many operators, that some don't
even want Nokia, period. That he, Elop, has to now try to appeal to those
operators by winning them back. And yes. The Nokia smartphone sales at that
time (Q1 data) was 11.9 million units. Now, six months after Elop tries to 'argue' with the operators to win them back, how is he doing? The latest quarter
has Nokia smartphone sales (Q3 data) down 47% from that level !!!! Nokia sold
6.3 million smartphones after Elop tried to 'argue' with the operators. He lost
half of what little customer base Nokia had left - AFTER he admitted carriers/operators hate his strategy
and many are refusing to sell Nokia. He lost almost half his market in the past
six months. How incompetent is that?

By the way, the Helsingin Sanomat quotation was MY
translation of the actual published Finnish translation from original English
as spoken by Elop. The Helsingin Sanomat quote is in fact, a slightly shortened
version of what Elop actually said. His full statement has been released in
full video and actual transcript. I have not taken the significant point about
carriers hating Nokia out of context, but yes, a more accurate full transcript
of 12 sentences has been released by Nokia. I won't bother us with the full
text here. The point is, that Elop admitted to the Nokia shareholders that many
carriers refuse to sell Nokia smartphones now after the Microsoft strategy was
released, and Elop admitted that the Microsoft partnership was explicitly the
cause of that sales boycott. And more than that, this fact was published (in
Finnish) by Finland's largest newspaper reporting from the Nokia shareholders'
meeting, and that story was also reported widely by the global press in other
languages.

Separately, Finnish biggest TV broadcaster YLE reported that Elop was asked
directly about Nokia market share in relation to resale problems (what I have
been calling the Nokia sales boycott for now for nearly two years already).
Elop's answer, according to YLE was that Elop hoped "that sales staff
in retail outlets would offer Lumia handsets to customers asking for a mobile
phone." Elop admits to Nokia shareholders on the explicit question, yes there is a retail problem - akin to a sales
boycott - where retailers HAVE Nokia smartphones in the store, but are refusing
to sell them. Refusing to show Nokia customers those phones when Nokia
customers ask for them. This problem has been independently verified by press
studies into various handset markets relating to Nokia smartphones overall, and
the Lumia series specifically, from Finland to France, from New York to
California, from UK to Hong Kong by countless press stories. But the fact was
settled by Elop in April 2012, when he openly admitted that in stores where
Nokia smartphones were in stock, the sales staff were refusing to show
customers Nokia smartphones, even when asked by name!

That was in April 2012, when the latest Quarterly data (Q1) had
Nokia still holding 8.1% market share in smartphones. Had Elop been able to fix
that problem? He released tons of new Lumia smartphones and lowered prices and
massively boosted marketing expenses and added new operators to his
distribution since then. But the retail boycott is continuing, or why else is
Nokia's market share only six months later (Q3) at 3.7%?

MARKET EROSION IS IRREVERSABLE

• Our mobile operator and distributor customers and
consumers may no longer see our Symbian smartphones as attractive investments
during the transition to Windows Phone. This would result in a loss of market
share, which could be substantial, during the transition and which we may not
be able to regain when quantities of Nokia Windows Phone smartphones are
commercially available.

Yes, how clear. Nokia smartphones using Symbian had 35%
market share in 2010 just before this strategy was announced. The 'mobile
operator and distributor customers' did not indeed support the 'Osborned'
operating system. By the time Lumia smartphones were launched one year ago for
Q4 in 2011, the Nokia smartphone market share had plummetted to 14%. To call
the loss of six out of every ten customers you had in just nine months as
"loss of market share which could be substantial" is a severe
understatement.

Has Elop's wonderful Windows strategy now managed to regain
any of the lost 19% of market share? Hardly. Since Q4 of 2011 when Windows
Phone based Lumia smartphones were launched by Nokia, the market share has continued in total
freefall and was now 3.7% by Q3 of 2012.

THE MIGRATION DID NOT SUCCEED

• We may not succeed in transitioning over time our
installed base of Symbian owners to our Windows Phone smartphones.

Yes. That is now obvious. After Lumia launched in Q4 of
2011, Nokia has not recovered ANY of its past 35% market share. The attempts
have failed totally to try to "succeed in transitioning over time our
installed base of Symbian owners to our Windows Phone smartphones."

After Lumia was launched in Q4 of 2011, this is how poorly
Nokia has "succeeded" in transitioning the installed base of Symbian
owners per quarter:

In the four Quarters that have reported so far, Nokia has
attempted a total of 13.2 million Symbian users per quarter to be migrated to
Windows Phone (ie a total annual customer base transition attempt of 52.6
million loyal Nokia smartphone users). Of those in how many cases did Nokia
"succeed in transitioning over time" the installed base? The level at
Q3 of 2012 was 2.7 million per quarter (10.8 million on an annual basis). Nokia
has lost four out of every five conversion attempts SINCE Lumia has launched!
(If we count from when the strategy was announced, and the full Elop Effect, in
reality it is 9 out of every 10 customers Nokia had.) If Elop was able to
sustain roughly a one-to-one transitioning level of Symbian to Windows Phone - what Elop promised with his new Windows based strategy - then he could at least claim modest 'success' to this strategy. (incidentially, I personally would NOT consider abandoning a 'guarateed growth' path on Symbian/MeeGo for only 1-on-1 no-growth stable transition to Windows, when the industry doubles every 18 months, but thats perhaps me, I prefer growth and profitable business in mobile, not stagnant business. But lets not talk about Tomi's higher standards, lets keep this only to Form 20-F and what Nokia warned two years ago)

So, as Nokia
bleeds 4 customers to rivals for every attempt to shift a Symbian customer to
Windows Phone, the Microsoft-based Lumia strategy is pure suicide for Nokia and
must be terminated immediately. Those customers must be given alternative Nokia
smartphones that run on MeeGo and Symbian that conform to Nokia customer
expectations (like great cameras, some QWERTY form factor alternatives, great
connectivity from unrestricted Bluetooth to microSD card slots and FM radios, etc)

WINDOWS WILL NOT BE BELOVED

• The Windows Phone platform may not achieve or retain
broad or timely market acceptance or be preferred by ecosystem participants,
mobile operators and consumers

Duh. Microsoft had a 12% global market share for Windows
smartphones once, briefly in 2007. It was briefly the
world's second most popular smartphone ecosystem behind the far bigger Symbian
and just ahead of the rapidly growing Blackberry and iPhone operating systems
at the time. You can definitely call 12% ie one in eight smartphones sold as
being a "preferred ecosystem" for some "mobile operators and
consumers". For 2010,. just before Nokia partnership was announced, the
combined market share for the older Windows Mobile and newer Windows Phone
smartphones for Microsoft had fallen far from that level. It was 5%. To try to push Microsoft as "preferred
ecosystem" at that time was utterly misleading. Microsoft had 5% market
share with the ecosystem that was bought only by one in 20 consumers and was
ranked 5th behind the massively bigger Symbian, Android, iOS and Blackberry.

But certainly, it was 'plausible' in February of 2011, when
the two CEOs, Stephen Elop of Nokia and Steve Ballmer of Microsoft strutted on
the stage together, that Nokia and Microsoft could turn their two worlds into
one big ecosystem. That was plausible at the time, not likely, but plausible.
Now we have the facts. Windows Phone was seen so poisonous and undesirable,
that many Windows Mobile equipment maker partners bailed out even before
Windows Phone launched, like the Top-10 smartphone manufacturers SonyEricsson,
Motorola and LG. After Windows Phone launched, Dell quit the partnership,
Samsung announced a new operating system to be directly a competitor of Windows
Phone (called Tizen, with smartphones to launch in 2013). Now after Windows
Phone 8 launched, HTC has reduced its offering and ZTE and Huawei have decided
not to bother to launch any smartphones on this new operating system. Every one
of these smartphone makers had shifted their attention to another or other
smartphone platforms, usually Android (although Dell has since also quit the
smartphone business altogether).

What do they know at Samsung, HTC, SonyEricsson ie Sony,
Motorola, LG, Dell, ZTE and Huawei, that only the Microsoft Muppet CEO Stephen
Elop cannot see? Its that Windows Phone is utterly undesirable. From 12% in
2007 to 5% in 2010 to 2% in 2011 to yes, 1.9% in Q3 of 2012, and - if the
usually very good predictor Kantar early market sales numbers prove to be
accurate - an expected about 1.5% for Q4 of 2012. The Windows Phone platform has
not achieved "broad or timely market acceptance by mobile operators and
consumers". Windows Phone has comprehensively failed to gain any traction
at all! Understand, after Nokia was added to the Windows ecosystem, the world's biggest smartphone maker and the world's biggest dumbphone maker Nokia, since then Windows market share has shrunk! Not grown, shrunk! Windows was the 5th biggest ecosystem at the time, it is now the 6th. (Oh, and watch this space, after Tizen launches on a couple of handsets and manufacturers, it may push Windows to 7th ecosystem, haha, during late 2013.. At least Tizen - like MeeGo before it - has strong carrier support, whereas Nokia CEO tells Nokia shareholders that carriers hate Windows Phone)

ABANDONING FIRST-MOVER GAINS

• Other competitive major smartphone ecosystems have
advantages which may be difficult for us to overcome, such as first-mover
advantage, momentum, engagement by developers, mobile operators and consumers
and brand preference, and their advantages may become even greater during our
transition to the Windows Phone platform.

Oh man, this hurts so bad. Yes, "first mover advantage" - how about
Mobile Money? Did you read in the Harvard Business Review where Google Chairman
Eric Schmidt wrote last year that Google's number two priority now is mobile
money? Where is the Google Money? It is still coming, as part of Google Wallet
and various NFC etc related experiences. And what of Nokia? Nokia has launched
Nokia Money years ago. Nokia had 12% of the mobile money market share in India
- the world's second largest mobile market behind only China - and where
regular banking is underserved and mobile money is growing at breakneck speeds.
Nokia was ahead of Google on Google's number two priority, in the second
biggest mobile market. Who is that smart that they get ahead of Google in tech? Who gains a first-mover advantage
over Google? (and what idiot CEO abandons the lead where Google says in public this is their number 2 priority? Why isn't Elop celebrating Nokia's lead over Google and showcasing Nokia Money as the prototype Google should follow?)

Nokia Money was 100% compatible with Symbian, with MeeGo and even
with S40 based featurephones of Nokia that sell in large numbers in India. But
Nokia Money was not compatible with Windows Phone. So what did Elop do? He decided to act against Nokia's best interests, just to please Microsoft! This is against his fiduciary duty as CEO, and Elop must be investigated for this kind of acts against Nokia's best interests! Nokia did
not expand his Nokia Money-oriented Emerging World market handsets running
Symbian, MeeGo and S40 for India that could have secured Nokia tremendous
competitive advantages and loyalty hooks into this decade. Rather? He shut down
the unit! He did not even sell it! 12% market share in India's rapidly growing
mobile money market. And Elop shut it down. Yes, Nokia is fully capable of
first-mover advantages if built on Symbian or MeeGo or even S40, but not using
Windows Phone.

What of the N9? The MeeGo based smartphone was released in 2011 and immediately
got massive positive responses everywhere. In 2012 it was rewarded by the
D&AG Awards (the "Oscars" of industrial design) as the best
designed device of 2011, not just besting the Lumia smartphones, but besting
the iPad 2 ! Who beats Apple at design? Nokia did, thats who. And did Mr
Microsoft Muppet allow the huge publicity in Britain at the D&AG Awards be
used to help promote and sell the N9 in all of Nokia's major markets? No. Elop
rather refuses to let the N9 be sold in the biggest European markets including
- yes, the UK (where the D&AD Awards are handed out).

Brand preference? Wanna really cry? The German newsmagazine Der Stern loved the
N9 so much, it told its readers to travel to Austria or Switzerland to go get
one, because Nokia was not selling the N9 in Germany (Europe's biggest
smartphone market where Nokia had 49.5% market share in 2010 according to
Kantar). Note, this is not a techie magazine but a weekly newsmagazine like
Time, doing a smartphone review! And they reviewed a smartphone not even sold
in Germany! And they loved it so much, they did actually recommend their
readers to go to another country to get one. Nobody achieves that level of
brand love (this side of Apple's iPhone). And did Elop rush to Germany to be
pictured on the cover of the very next issue of Der Stern holding the N9 in
many colors and promising the German readers that yes, of course the N9 will be
immediately launched in Germany and its sister phone, the N950 will also be
soon? No. Elop forbids selling the N9 in Germany! No wonder Nokia's market
share is down to 5.6% (Symbian and Windows Phone combined) in Germany now in
November 2012, according to Kantar's latest numbers.

Nokia is fully capable of building highly desired, beloved, award-winning
handsets - and on Symbian and on MeeGo they are not artificially restricted by
all the weird limitations that Microsoft has built into the compromise that is
the Windows Phone 8 operating system. Symbian was open source, had at its peak
over 20 equipment manufacturers as partners as well as operator/carrier
partners. Nokia's MeeGo OS was also an open source system with many handset
vendors and carrier partners. Windows Phone is a closed system, where Microsoft
holds a dictatorial control over its world and its equipment maker partners are
deserting the platform and not one carrier has signed onto it. But its not like
they don't want to. The MeeGo platform that Elop abandoned? Samsung took over,
renamed it Tizen and has today - get this - Telefonica (Spain's biggest
operator/carrier) as a carrier partner, as well as NTT DoCoMo (Japan's biggest
operator/carrier), SK Telecom (South Korea's biggest), and others such as
Sprint of the USA. Its not that the carriers do not welcome and wish for a
'third ecosystem'. But very clearly they have comprehensively rejected
Microsoft and Windows Phone.

DAMAGED NOKIA BRAND

• Our brand preference may erode due to various factors,
such as inadequate marketing, quality issues, lack of affordable locally
relevant services, applications and content or lack of success in smartphones.

And yes, that too has happened. Nokia's brand had been in
the top 10 most valuable brands every year since the list was released. After
the Elop Effect, the Nokia brand fell out of the Top 10 for the first time ever. How
much of that damage has resulted in the Nokia handset average sales price
falling (which was growing when Elop took over), or the Nokia costs of
marketing going through the roof just to move handsets (Nokia profits were
growing when Elop took over, the handset units profits vanished and have
produced ever bigger losses ever since) and how much has it hurt Nokia market
share - was 35% in smartphones in 2010 when Elop took over, and was 3.7% in Q3
of 2012, the latest Quarter for which we have data.

SOURCING PARTS

Talking about sourcing parts, components and subassemblies: Additionally,
with the increased bargaining power of other large manufacturers in the mobile
device and electronics industry, we may not be able to achieve as favorable
terms as in the past resulting in increased costs that we may not be able to
pass on to our customers.

Yes. In total handset production, Nokia was 50% bigger than
Samsung in year 2010. Today Samsung is 25% bigger than Nokia. In Smartphones,
where most of the innovation is happening, the issue is even more pronounced.
Smartphones have far more features and abilities, and more technical
sophistication within those matters. Thus in smartphones Nokia faces a far more
broad range of critical components and subassemblies. In 2010, Nokia was not
just the largest smartphone manufacturer in the world, Nokia was twice as big
as Apple and four times bigger than Samsung. Today (latest Q3 data) Nokia has
tumbled to 10th largest smartphone manufacturer meaning Samsung, Apple, Huawei,
Sony, ZTE, HTC, Lenovo, RIM and LG are all now bigger than Nokia and have more
scale-based advantages in sourcing parts and negotiating bulk discounts. In Q3
just in smartphones, today Apple is 4 times bigger than Nokia, Samsung more than 8
times bigger.

CLOSING FACTORIES

In the Form 20-F, Nokia reveals that it ran 10 factories
that made handsets. Seven of those (Finland, China, Romania, Hungary, South
Korea, Mexico and Brazil) were able to produce smartphones. In 2010, Nokia's
total smartphone production was 103.6 million units or 35% of the global
smartphone production capacity. To understand the scale, Apple sold 47.5
million smartphones that year and none of those iPhones were made at Apple
factories, they were physically manufactured at various Foxconn factories in
China. No rival smartphone manufacturer exceeded Nokia's 2010 smartphone
production capacity in the year 2011, even as the industry grew 63% that year!
Only in year 2012, has Nokia's massive smartphone capacity of year 2010 been exceeded
by Foxconn and by Samsung.

The Form 20-F reveals that on contract manufacturing (such
as Compal of Taiwan, which made the first Lumia handsets), Nokia warned "In
future, we may increase the use of contract manufacturers to produce in the
normal course the entire product, which is subject to certain risks."
Nokia wrote a long list of possible problems that this might introduce,
concluding: "Such failures or interruptions could result in our
products not meeting our and our customers’ and consumers’ quality,
safety, security and other requirements, or being delivered late or in
insufficient or excess volumes compared to our own estimates or
customer requirements, which could have a material adverse effect on our sales,
results of operations, reputation and the value of the Nokia brand."
(emphasis in bold added by me)

Remember, Nokia had when this strategy was announced, by far
the world's largest mobile phone handset manufacturing capacity, with a
globally placed set of factories, of the utmost modern design, capable of
handling in perceived proportion the mix of low-cost high-volume featurephone
handsets, and the higher cost smartphones. Nokia had 10 handset factories
spread across the planet, near the customers. There was no lack of ability to
build smartphones in Nokia's own factories, yet Stephen Elop went to the
bizarre option of using an outside company, Compal, to build the first Nokia
Lumia handsets. That was, as can be seen from the above, with predictable
results. The early Lumia handsets were built with considerable amount of bugs,
production flaws and problems that caused a lot of PR damage to Nokia,
necessitating recalls, replacements, total new software re-installs, purchase
discounts and refunds. The outsourced production was a disaster and damaged the
launch and early perception of the whole Lumia brand as well as Nokia overall.
There was the further problem of having committed to certain volume levels of
production that Nokia could not then adjust, something it could have easily
done with its own factories.

The worst aspect is, that Nokia's own smartphone production
ability, when the Lumia series was launched, was already running at more than
60% idle! So Nokia carried the costs of its own factories idling, while
Taiwanese Compal was charging outsourced production premiums, while delivering
underperforming quality problem ridden products. To even suggest this kind of stupidity, is a sign of a totally incompetent CEO. Elop has no concept of how to run his own company. He had his OWN smartphone factories at 60% idle, yet he purchases outside production for the first Lumia series. He is a moron. He has to be fired.

As the Nokia smartphone market has continued to shrink,
today out of total Nokia smartphone production capability Nokia used to have,
more than 90% has been idling. As to featurephone/dumbphone capacity, Nokia has
receeded about 25% from its peak capacity two years ago, so one quarter of its
high-volume dumbphone factory capacity has also been idling. Nokia has thus
shut down or sold several of its factories as this incredible amount of
overcapacity was so large, Nokia's own management admits by these actions,
Nokia will not be returning to its old levels of production! Nokia has totally
failed in the strategy and abandoned a key competitive advantage out of scale
and the resulting production capacity advantage which traditionally is a very
long-term competitive advantage that is very difficult for smaller rivals to
match or exceed. Nokia gave it away and admitted comprehensive failure of this
aspect, by selling or shutting down several handset factories already.

Note that of the seven factories Nokia had that were capable
of producing smartphones, two have been shut down completely or sold (Finland
and Romania). So Mr Elop's strategy has definitely resulted in Nokia's total
maximum capacity being so severely damaged, Nokia's maximum smartphone
production capacity is down 29% from what Nokia had in 2010. Thus, if you ever
thought Nokia would 'return' to just the levels of smartphone sales it did in
year 2010, of 103.6 million smartphones, think again. That Nokia sold or shut
down 29% of its smartphone production capacity - even after the debacle of
disasterous experimentation with outsourced production - means Nokia's own
management knows it cannot return to over 100 million per year smartphone sales
levels or beyond, in the foreseeable future.

Remember, a phone handset factory project is a costly investment in the several
hundreds of millions of dollars that takes years just to get the factory up and
running. These decisions are not taken lightly. So, Stephen Elop initially
promised his strategy would, as Form 20-F said "This strategy
recognizes the opportunity to retain and transition the installed base of
approximately 200 million Symbian owners to Nokia Windows Phone smartphones
over time." And the time-period for this transfer was, as Nokia wrote:
"We expect the transition to Windows Phone as our primary
smartphone platform to take about two years." (emphasis in bold
is by me).

But well before the two-year window is even closed, Elop has
already admitted he will come nowhere near his goal to 'retain and transition'
the existing Nokia Symbian customer base to Windows Phone on Lumia. He has so
far lost 9 out of every 10 Symbian customers he even attempted to migrate. And
he has sealed the fate of Nokia's ability to compete as the world's biggest
smartphone maker, by selling 29% of his factory capacity in smartphones (but
not sold any of the capacity in high volume low-cost dumbphones).

How much capacity does Nokia have? We do not know how close
to peak capacity the factories in 2010 ran, but roughly speaking as Nokia's own
smartphone sales grew 52% from 2009 to 2010, they must have been highly
utilized already. If we take 29% out of the capacity in 2010, it means Nokia
management, under Elop, looking realistically at the market demand for Lumia,
now suggest by factory closings, the peak Nokia capacity is somewhere near 74
million smartphones. This starting year, 2013, the world will buy about 1
Billion smartphones and if Nokia were to fully sell its maximum capacity in
smartphones - that would only give Nokia 7% market share this year!

Elop's strategy suggested he is capable of transitioning the
total Nokia customer base from Symbian to Windows Phone. Nokia owned more than
a third of the global smartphone market when he said that, and Nokia's
smartphone sales grew more than Apple, more than Samsung and more than RIM that
year, doing it profitably (with increasing profits to the end of the year). One
third of the world's smartphones would be 333 million smartphones in 2013.
Samsung will be doing roughly that level. Nokia could easily have done as much,
if Elop had not meddled with Nokia's dominating smartphone strategy at the
time. Instead, in year 2012, Nokia sold only about 35 million smartphones. Elop
has destroyed nine out of every ten loyal customers relationships Nokia has
had, and Elop has now admitted defeat by his actions by limiting Nokia's ability even to compete
with the biggest smartphone makers anymore.

NOKIA SET ITS OWN STANDARDS - AND BY THOSE IT HAS FAILED

I end with the same quotes I had in the above. This blog is not Tomi Ahonen's listing of what all is wrong with Nokia's strategy (there is much more that is rotten, beyond these 20 items). This Is Nokia's own list of risks it testified to when filing to the SEC and NYSE. Nokia very
VERY clearly indicated what was the biggest risk to the risky Microsoft
strategy. Nokia wrote in the Form 20-F

Our ability to maintain and leverage our traditional
strengths in the mobile product market may be impaired if we are unable to
retain the loyalty of our mobile operator and distributor customers and
consumers as a result of the implementation of our new strategy or other
factors. (bold in original)

Nokia further explained how much this is a true competitive
advantage and key to Nokia long-term market dominance:

We have a number of competitive strengths that have
historically contributed significantly to our sales and profitability. These
include our substantial scale, our differentiating brand, our worldclass
manufacturing and logistics system, the industry’s largest distribution
network and our strong relationships with our mobile operator and distributor
customers. Going forward, these strengths are critical core competencies
that we will bring to the proposed partnership with Microsoft and the
implementation of our Windows Phone smartphone strategy. Our ability to
maintain and leverage these strengths also continues to be important to our
competitiveness in the mobile phones market. (bolded emphasis added by me)

As
discussed above, however, the proposed Microsoft partnership and the adoption
of Windows Phone as our primary smartphone platform are subject to certain
risks and uncertainties. Several of those risks and uncertainties relate to whether
our mobile operator and distributor customers and consumers will be satisfied
with our new strategy and proposed partnership with Microsoft. If those
risks were to materialize and mobile operator and distributor customers and
consumers as a consequence reduce their support and purchases of our mobile
products, this would reduce our market share and net sales and in turn may
erode our scale, brand, manufacturing and logistics, distribution and customer
relations. The erosion of those strengths would impair our competitiveness
in the mobile products market and our ability to execute successfully our new
strategy and to realize fully the expected benefits of the proposed
Microsoft partnership. (bolded emphasis added by me)

Understand what this means. Nokia testified in the SEC
official filing of Form 20-F that Nokia historically had the world's largest
distribution network, which was one of Nokia's biggest competitive advantages.
Nokia also testified it had strong carrier relationships with mobile operators
and distributors. These too were critical competitive advantages that Nokia
held when Elop took office.

Today nobody suggests Nokia has the strongest distribution - Elop himself has
been abandoning Nokia distributors and pissing them off, who have gone, in most
cases from Russia to Africa - to Samsung, who now have clearly the biggest
distribution network in mobile.

Worse, Nokia's very survival depends on the support of the
operators/carriers. Nokia testifies so in Form 20-F "Whether our operators and distributor customers (are)
satisfied with our... partnership with Microsoft" and how critical is
that? Nokia testified in the filing of Form 20-F that "the erosion of
these strengths woudl impair our ... ability to execute successfully our new
strategy and reaslize fully the expected benefits of the proposed Microsoft
partnership." If the operators/carriers and distributors refuse to support
fully the Microsoft Windows strategy, the strategy is not viable. It cannot
succeed without the operators supporting it!

Not my words. Words of Nokia filing for the SEC in Form 20-F. Nokia saying the
Microsoft strategy would "be impaired if (Nokia) is unable to retail the
loyalty of the mobile operators and distributors."

Elop reported to the Nokia Shareholders Annual Meeting in
April that "Indeed, Microsoft did buy the Skype company as part of the
ecosystem that comes with Windows Phone and Windows." What do these operators/carriers think of
Skype? "The feedback from operators is they don’t like Skype, of
course." Why? Elop explains because "it could take away from
revenues." and the kicker on are the carriers onboard with Nokia and
its Microsoft strategy? Elop told Nokia shareholders "And, so what
Microsoft has done – and we’ve been part of these conversations as well with
operators – is as you correctly say, if operator doesn’t want Skype installed
on a Windows Phone from Nokia or any other company, then the operator can make
that decision."

Elop told Nokia shareholders this April - six months after
Lumia had launched and more than a year after the Microsoft strategy had been
revealed - that operators/carriers did not like it, "of course", many were refusing to take
ANY handsets that use the Windows Phone operating system - like say NTT DoCoMo,
the biggest carrier of Japan - and the reasn they don't like the Microsoft
partnership with Nokia is "Skype, of course". So well known is the
operator/carrier hatered of Skype, that Elop added 'of course' to his statement
to Nokia shareholders. Everybody knows this. Not my words - Elop's words. Of
course the carriers hate Skype.

Skype was not in-built into Windows Phone 7. Windows Phone 7 sold at its peak,
just over 4 million units per quarter this year. Windows Phone 8 does have
Skype fully integrated not only to the Nokia Lumia handsets, but integrated to
the 1.2 Billion desktop PCs that Microsoft is now upgrading to Windows 8. If
the operators "don't like Skype, of course" almost a year ago, now,
that Skype is fully integrated - they positively hate it now with Windows Phone 8 and Skype fully integrated.

This is not Elop's mistake. Elop did not buy Skype for Microsoft. This is
Ballmer's call. He wanted Skype to help keep Microsoft relevant in an internet
age for personal computers. It may help Microsoft on the desktop, but it
positively killed Nokia's chances on Lumia and Windows Phone. Microsoft
purchased Skype in June of 2011. Microsoft had 2.4% global smartphone market
share at that time across its Windows systems. Since then Motorola, LG,
SonyEricsson and Dell have quit the Windows ecosystem (and several said or
hinted that the operator/carrier demand had dried up). Samsung has reduced its
Windows based portfolio and launched its own OS, Tizen - which has half a dozen
carriers/operators SUPPORTING the new OS. And HTC has reduced its offering on
Windows Phone.

After sacrificing all those millions of Nokia Symbian
customers to try to retain some market, how is Windows Phone today? The Q3
numbers had Microsoft's market share at 1.9% and the early view to Q4 (using
usually reliable Kantar numbers as a guide) suggest Windows Phone to have about
1.4% market share in Q4.

Elop told Nokia shareholders "The feedback from operators is they don’t
like Skype, of course."

That is the operator/carrier response to Nokia's Microsoft
partnership. They simply hate it. When Ballmer commented on how Windows Phone
was doing as Nokia was ramping up in 2011, Ballmer said in September 2011
Windows Phone sales were "below expectation." That is not a success of a so-called 'third ecosystem'. And then, any
disagreement by Elop over at Nokia? In May 2012 - yes, after AT&T had
launched Lumia even in the USA, Elop's words on how Windows was doing with
Nokia Lumia? Elop said the sales were "below expectations". What was Elop's
latest statement about Windows Phone 8 market performance? That some early tech
reviewers like the new phones and that Elop told CNet on December 10 that he
was "certainly pleased" with how the new Lumia were selling - that is not a roaring success either, but then notice this - Elop admits on The Next Web that yes, Nokia had not run a large production of the
new Lumia, so this 'pleased' level of sales is out of very small initial
production run (far less than how Nokia ramped up Lumia the first time). And
meanwhile, many independent analysts who do channel checks, have all said that
Nokia sales are sluggish or below early expectations in Q4. As I said, the
Kantar numbers that I analyzed, suggested worldwide Windows Phone sales are
down (but Symbian sales for Nokia are up? Wouldn't that be ironic).

SKYPE KILLED THIS STRATEGY

Only minutes after the Microsoft partership was announced by Elop on 11
February, 2011, I was writing on Twitter that this was good for Microsoft but
deadly for Nokia. I warned that Nokia's market share would collapse and Nokia's
smartphone business would become not viable and Nokia would become Microsoft's
slave and become a low-cost box-mover like Dell in PCs. But, I did say and
write, on Twitter and on my blog at that time, that this partnership might work
out for both parties. It was not likely, but it was plausible.

When Microsoft bought Skype, I was immediately on Twitter and on my blog
explaining that the Skype purchase had effectively killed the Windows strategy
for Nokia. I was the first person to say so in writing or in public. In March
of 2011, Nokia told in its SEC fillings, in Form 20-F that the whole Microsoft
strategy would depend on whether the mobile operators would "be satisfied
with our partnership with Microsoft". One year after that, in early April,
Elop had to confess to Nokia shareholder that there was no love for the
Microsoft partnership. That even as Elop himself had been sitting in meetings
that Microsoft had with carriers, the carriers hated Skype so much, many were
not taking Windows Phone at all, and all carriers hated it. Or in Elop's words "The
feedback from operators is they don’t like Skype, of course."

Of course

The feedback from the carriers is that they don't like
Skype. Of course.

The mobile operators/carriers are refusing to support Nokia in its Microsoft
Windows Phone strategy. Elop has heard it for now two years. He keeps
complaining that there is no carrier support or that it is weak. Whatever
promises he gives us - like that T-Mobile would bring big USA success, or
AT&T would bring huge US success, etc, prove to be total fabrications.
Before Elop announced the Microsoft partnership, Nokia sold 11.1 million mobile
phones in the USA. This year 2012 (with Q4 an optimistic estimate by me) after
the full Lumia launch in the USA, Nokia's total USA market sales is .. 2.1
million handsets!

The feedback from the carriers is that they don't like
Skype. Of course.

THIS IS THE PERFECT PICTURE OF STRATEGY FAILURE

In 2010 Nokia had 35% market share in smartphones and
Microsoft had 4%. The soon-to-be-announced partnership had a combined market
share of 39%. Then this happened:

Nokia sold 103.6 million smartphones in 2010. Nokia GREW
smartphone sales in 2010 by 53% from the year before. Nokia added 35.8 million
new smartphone customers during 2010, compared to 22.4 million new smartphone customers added by Apple,
17.0 million added by Samsung and 13.4 million added by RIM. The numbers do not lie. This means that in 2010, globally, Nokia
was growing faster than its nearest rivals - the gap between Nokia and the pack
chasing it, was growing wider, not narrower.Who grows faster than Apple's
iPhone?Who grows faster than Samsung, come on! And Nokia was doing this
profitably, with increasing profits.

Nokia was towering over its rivals, more than twice as big as its nearest rival
in 2010 !!! That is more global domination than Toyota has EVER had in cars (or
General Motors when it has been biggest, either - ever!). And Nokia's gap to
the pack was growing, not shrinking when Elop took over. He had stepped into a
winning platform play, Symbian was the bestselling smartphone OS in Latin
America (which has more mobile phone users than North America) and the
bestselling smartphone OS in Europe (which is bigger than Latin America); and
the bestselling smartphone OS of Africa (which has more mobile users than North
and Latin America combined); and the bestselling smartphones OS of Asia (bigger
than North America, Latin America, Europe, Australia and Africa - combined).

Nokia was the bestselling smartphone and Symbian the bestselling OS in 2010. Nokia's Symbian was also by far the most widely used smartphone OS by installed base, the most used smartphone OS on five of the six inhabited continents (and even Nokia had the most used smartphone of the uninhabited Antarctica, where Nokia's Linux-based Meamo was the favorite of scientists using smartphones and preferring the open source Linux software for the N900).

Not just most sold, and biggest installed base. Nokia had the second bestselling smartphone App Store, behind only Apple's - ahead of Blackberry, Android, Palm and Windows - and
the gap to Apple at the time was closing, not growing. Nokia had by far the world's largest army of software developers. Nokia was about to release its new MeeGo operating
system we saw winning all sorts of awards on the N9 smartphone which many
called better than the iPhone - something the Lumia series is never said to be
in any major tech reviews and comparisons.

This all, Elop threw away with a strategy so risky, Nokia
itself admitted if the strategy did not work out, Nokia not only would lose its
smartphone leadership, it might even damage its dumbphones/featurephones
business. Yes, this was the most boneheaded management move of all time. And
now the time is up for Mr Elop.

MR ELOP, YOUR TWO YEARS ARE UP

Nokia wrote in the Form 20-F "We expect the
transition to Windows Phone as our primary smartphone platform to take about
two years." The exact two-year milestone will be on 11 February, 2013,
in about 40 days from today. I expect many business, telecoms and strategy
writers to re-examine the Nokia failure in its Microsoft strategy at that
point. Lets now use Nokia's own standard for how to measure success or failure
of its strategy, as Nokia told us in the Form 20-F.

Nokia warned that if the Nokia strategy with Microsoft were
to fail, most likely Nokia would then become a low-margin box-mover basic handset
maker. This is what Nokia wrote:

Our proposed partnership with Microsoft and change in our
smartphone platform strategy are subject to certain risks and uncertainties,
which could, either individually or together, significantly impair our ability
to compete effectively in the smartphone market. If that were to occur, our
business would become more dependent on sales in the mobile phones market,
which is an increasingly commoditized and intensely competitive market, with
substantially lower growth potential, prices and profitability compared to the
smartphone market.

Here are some of the risks that Nokia identified what might
go wrong, that did, in fact go wrong:

Explicit Risk 1 Windows Was Weak - "Windows
Phone is an unproven addition to the
market focused solely on high end smartphones with currently very low adoption,
and the partnership may not succeed in
developing it into a sufficiently broad competitive smartphone platform. That
"very low adoption" when the partnership was announced, was 2%. At
the latest Quarter (Q3) that market share had fallen to 1.9%. It may fall to
1.4% by Q4. Yes, very obviously the Windows Phone platform has failed in
developing into a "sufficiently broad" platform.

Explicit Risk 2 Cannot Differentiate - "Windows
Phone platform may not enable us to produce smartphones that are differentiated."
Nokia traditionally had the most diverse smartphone portfolio. Today the
Lumia series is the least diverse series. Samsung has obviously stepped in to
offer the broadest portfolio and taken a huge lead in smartphones.

Explicit Risk 3 Cannot Get Scale - The Microsoft
partnership may not achieve in a timely manner the necessary scale, product
breadth, geographical reach and localization to be sufficiently competitive in
the smartphone market. Nokia sold 29 million smartphones per quarter when
Elop took over. It now sells about 6 million per quarter.

Explicit Risk 4 Ruin China while Not Gaining in USA
- The Microsoft partnership may erode our brand identity in markets where we
are strong like China and may not enhance our brand identity in markets where
we are weak like in the United States. Before Elop announced this mad
strategy, Nokia was the overpowering number 1 in China the world's largest
smartphone market, with over 70% market share. That is now down to about 5%.
Did that sacrifice translate into a USA success? No. The Nokia smartphone
market share in the USA was 6.8% using Symbian, it is now less than 2.9% in the
USA using both Windows Phone and what remains of Symbian.

Explicit Risk 5 Nokia Mobile Advertising Fails - We
may not succeed in leveraging the Microsoft advertising assets to build a Nokia
based advertising platform on our smartphones. Yes. Elop "Mr
Ecosystems" simply sold away the Nokia-owned mobile advertising unit when
his strategy was burning too much cash.

Explicit Risk 6 Profitability Ruined - We may not
succeed in creating a profitable business model when we transition from our
royaltyfree smartphone platform to the royaltybased Windows Phone platform. Nokia
profits from smartphones every single quarter they have been manufactured up to
Elop's new strategy. In year 2010, when the world was still emerging from the
global economic crisis and most of Nokia's rival full-portfolio handset makers
were reporting losses, Nokia's the smartphone unit generated 1.5 Billion Euros
(2 Billion US Dollars) of profits. And remember, the profits were growing at
the end of the year, showing the biggest jump in profitability Nokia
smartphones had ever seen. Since Elop's strategy Nokia's smartphone unit
generated a loss in 2011 of 400,000 Euros (about 520,000 US dollars) and now,
using consensus opinions of Q4 results, Nokia will report roughly a loss of 1.1
Billion Euros (1.4 Billion US Dollars) in its diminishing smartphone unit in
2012. So Mr Elop has destroyed over two years, about 5.9 Billion dollars in
profits for Nokia Corporation (why is this Microsoft Monkey allowed to remain
as CEO? This is complete madness!)

Explicit Risk 7 Patents - We may not be able to generate sufficient
patentable inventions or other intellectual property to maintain, for example,
the same size and/or quality patent portfolio as we have historically. And
in efforts to raise cash to cover for the destructive Microsoft strategy, Nokia
has been selling its patents in big bunches to various Patent Trolls, poisoning
the well of future wealth

Explicit Risk 8 Operators & Distributors Abandon
Nokia - The proposed Microsoft partnership may cause dissatisfaction or
foreclose the ability to do business with mobile operators, distributors and
suppliers. So "cause dissatisfaction" - Elop admitted to Nokia
shareholders that mobile operators do not like the partnership, because of
Skype, "of course." So clear is the explicit dissatisfaction in the
carrier community that Elop added 'of course' when he was asked on point about
that question. And worse, "to foreclose the ability to do business"
with operators/carriers & distributors? Yes. That too was explicitly
admitted by Elop at the annual shareholders' meeting, that yes, some operators
who traditionally bought Nokia handsets now refuse any Microsoft Windows Phone
based smartphones. The numbers could not be more explicit. Before this
strategy, Nokia sold 29 million smartphones per quarter. Since then the
industry has more than doubled. Now after the Nokia reseller boycott, Nokia
only manages to sell 6 million smartphones per quarter.

Explicit Risk 9 Damage Employee Morale - The
implementation of the Microsoft partnership may cause disruption and dissatisfaction
among employees leading to the loss of key personnel. The exodus of Nokia
staff has been dramatic and devastating including several of Nokia's
longest-standing sales and marketing staff as well as Nokia's top technical
staff starting with its CTO.

Explicit Risk 10 Damage Recruitment - We may not
be able to recruit and motivate appropriately skilled employees to implement
the Windows Phone smartphone platform and to work effectively and efficiently
with Microsoft and the related ecosystem. The proof is in the pudding,
again. The Lumia series launch (and relaunch) have been plagued with all sorts
of implementation problems and failures from faulty hardware and software to
almost instant massive price discounts to feuding with thought-leaders and
bloggers and astroturfing and fake Amazon ratings, to faked 'Pureview' pictures
etc etc etc.

Explicit Risk 11 Ongoing Tablet Diversion - We do
not currently have tablets in our portfolio. There is no doubt, that
Microsoft - Microsoft not Nokia - would prefer to see tablets in the Windows
Phone ecosystem. For any handset maker like Nokia, to turn a non-profitable
smartphone unit and refocus any of its scarce resources to try to build a
world-beating (iPad-beating) tablet would be foolish. Mobile phone handsets are
distributed, marketed, priced and sold totally differently from tablet PCs. A
traditional PC maker like Apple or Samsung that has the distribution and sales
already for the traditional PC market, would be wise to launch tablet PCs. A
pure handset maker like Motorola or RIM (or Nokia) would find it hopelessly
loss-making to try to enter that market - witness RIM and Motorola. For Nokia's
CEO to even entertain a tablet fantasy without putting a clear stop to any such
projects and prospects, shows he is thinking like a Microsoftian, not a Nokian.
He is not fit to run Nokia the handset manufacturing giant that is currently in
distress. A tablet rumor should be killed comprehensively by the CEO as a
luxury Nokia cannot now afford (And besides, the tablet OS should have been -
would have been MeeGo, considering the Nokia N9 smartphone beat the iPad as the
best design of 2011 at the D&AD Awards).

Explicit Risk 12 Damaged Credit Rating - The partnership
with Microsoft and new strategy could cause lowered credit ratings from the
credit rating agencies. Yes. Nokia was nearly perfect by all three credit
ratings agencies on February 10, 2011, one day before this strategy was
announced. Within 15 months of this strategy being announced, all three credit
ratings agencies had downgraded Nokia so many times, Nokia was rated (and still
is, obviously) junk by all three credit ratings agencies. It is one of the
fastest destructions of a credit rating by any global market leader in any
industry and all by itself serves as proof that Elop is one of the worst CEO's
in the economic history of corporate governance.

Explicit Risk 13 Symbian Collapse - Our mobile
operator and distributor customers may no longer see our Symbian smartphones as
attractive during the transition to Windows Phone. This would result in a loss
of market share, which could be substantial, during the transition and which we
may not be able to regain when quantities of Nokia Windows Phone smartphones
are commercially available. Totally prophetic. Nokia's Symbian market share
was 29% when Elop took over. He promised a 1 to 1 transition from the Symbian
base to the Windows Phone base. But the 'Osborne Effect' and the 'Ratner
Effect' both caused by Stephen Elop communications during February 2011, caused
a collapse of Symbian sales. During 2010, Symbian based Nokia smarpthones had
grown more than the iPhone in absolute terms globally, grown more than Samsung,
grown more than Blackberry. The gap between Nokia and its rivals had been
growing, not shrinking before this strategy. Immediately after Elop announced
his strategy, the Symbian sales growth stalled and reversed into an
unprecedented fall. Nokia branded Symbian based smartphone sales fell from 29%
market share when this strategy was announced to 14% in only three quarters, by
the time the first Lumia branded Nokia smartphones running Windows Phone were
launched. Elop himself caused the collapse in Symbian sales by calling his own
products rubbish (in the infamous Burning Platforms memo, the costliest
management communciation of all time) ie the 'Ratner Effect' and the
simultaneous announcement of his current platform as obsolete with no
replacement devices on the new platform ie the 'Osborne Effect'.

Explicit Risk 14 Transition Failure from Symbian to
Windows Phone - We may not succeed in transitioning over time our
installed base of Symbian owners to our Windows Phone smartphones. The math
is undeniable. For every 10 attempts Nokia has made of its Symbian users to
migrate to the Lumia series running Windows Phone, nine have failed! Only one
in ten Symbian users from 2010 has so far been successfully migrated to Windows
Phone while nine have gone to rivals, mostly Samsung and Apple. The transition
failure is comprehensive, and this before we remember that the Yankee Group
independent survey of new Lumia owners in 2011 found that 4 out of 10 new Lumia
owners was so disgusted with their new smartphone, they ranked their
satisfaction worst on the scale. Yes, worst smartphone they have ever seen, say
4 out of 10 Lumia owners. This is not a success. There is the infamous 101
faults list for past Nokia owners to try to migrate to Windows Phone (upgraded
with even more Elop, now with 121 faults) and the very latest analysis at All
About Symbian still finds major faults in so many Nokia 'staples' in features
regular Nokia smartphone owners on Symbian (And Maemo and MeeGo) expect, that
are still absent from Windows Phone, like the ability to see the time on the
idle screen (bearing in mind, of the planet's population, a Nokia branded phone
is the world's most used watch, ahead of Timex, Casio, Citizen etc). Like the
lack of full file transfer on Bluetooth, like the lack of data transfers via
NFC. Like the lack of microSD support (in all but one smartphone). Etc etc etc.
The Lumia series resale price is nonexistent, meaning in most markets where
phones are sold at full prices (no subsidy) the resale market is ruined as
well, meaning the Lumia series is unsuited for Africa, India, Indonesia, etc
etc etc.

Explicit Risk 15 Windows Will Not Be Beloved by Consumers
• The Windows Phone platform may not achieve broad market acceptance by
consumers. Very obvious. When this strategy was announced, Windows on
smartphones was the world's fifth-bestselling smartphone OS (when adding
Windows Mobile and Windows Phone based smartphones). That was to replace
Symbian which at the time was the world's bestselling and the world's most used
smartphone OS. Today Windows Mobile has been extinguished, and Windows Phone
remains. Has it grown from 5th ranking to get better consumer acceptance? No.
Windows Phone now ranks as 6th most used smartphone OS, behind Android, iPhone
and Blackberry - and the new Samsung bada OS - and insult to injury, still
trailing Symbian. The latest Kantar numbers suggest that for Q4 we will see
Windows Phone market share decline while Symbian market share would increase!
By every conceivable measure, it is obvious, that after the biggest marketing
spend by any handset maker of all time, with Nokia initial global launches of
Lumia, supported by billions more by Microsoft including giving away free Xbox
360 game consoles, and supported by the biggest-ever new phone launch marketing
efforts by carriers like AT&T in the USA - Windows Phone has fallen from
5th most used smartphone to 6th most used. It is not beloved by consumers.
Windows is despised by consumers.

Explicit Risk 16 First Mover Advantage Lost - Nokia first-mover advantage (may be lost) during our transition to the Windows Phone
platform. Yes. Apple is rumored to bring NFC to the iPhone 6. Nokia had NFC
on Symbian and MeeGo well before Windows Phone. The first Lumia series did not
even support NFC. Google is calling 'mobile money' its number 2 strategic
priority. Nokia had its Nokia Money launched commercially years before and was
strong for example in India. That is now abandoned because Windows Phone does
not support the technology. Nokia had the magnificent camera with 41 megapixel
sensor in the Symbian based 808 Pureview but Windows Phone does not support
that pioneering technology. Now Samsung has launched the Galaxy Camera
smartphone with the biggest optical zoom and best camera on the market. Nokia
is losing its first-mover advantages to Apple, to Google and to Samsung. All
because of Windows Phone.

Explicit Risk 17 Nokia Brand Damaged - Our brand
preference may erode due to the lack of success in smartphones. Nokia was
ranked in the Top 10 most valuable brands by Interbrand every single year that
survey was published, and ranked number 7 when Elop took over. Nokia
immediately fell out of the Top 10 after the new strategy was announced.

Explicit Risk 18 Lose Scale Advantage in Sourcing Parts
- "We may not be able to achieve as favorable terms as in the past
resulting in increased costs that we may not be able to pass on to our
customers." The sourcing issue is so damaged, even several of Nokia's
long-standing suppliers have gone from healthy profits to loss-making.

Explicit Risk 19 Cause Damage by Outsourcing Production
- "We may use contract manufacturers to produce the entire product, which
could result in our products not meeting our customers’ and consumers’ quality requirements."
The original Lumia 800 and Lumia 710 launch was so riddled with faults that
Nokia resellers were reporting Nokia-record returns. Both first Lumia handsets
were completely badge-engineered by Compal of Taiwan, using non-standard Nokia
parts, and the new Microsoft operating system. So nothing in the first Lumia
was true Nokia except perhaps the brand pasted onto the cover and the sexy
physical design that was stolen from the MeeGo based award-winning N9. Its like
if Porsche took the classic design of the 911, and then asked low-cost car
maker Tata of India to manufacture a look-alike 911, with an engine not from
Porsche but from low-cost car maker Proton of Malaysia and then just sticked on
a Porsche sticker on the hood and tried to sell that as the new 911 - with
classic 911 prices mind you - in Porsche stores to loyal Porsche customers. I
think the conversion rate would probably be about 9 Porsche customers lost for
every 1 retained, and most of those who actually bought this fake Porsche would
be incredibly unsatisfied. Its prices would fall within weeks of the first
launch (exactly as happened with the Lumia 800, exactly as happened again with
the Lumia 900, and exactly as is now happening already with the Lumia 920!!!)

Explicit Risk 20 Destroy Manufacturing Capacity - The
most difficult-to-achieve, most costly barrier to entry to scale in smartphones
is manufacturing capacity. Nokia had built a huge lead in its manufacturing
ability, with 10 handset factories around the planet of which seven could
manufacture smartphones. Nokia had in 2010 the ability to produce one in three
smartphones sold on the planet. Since the Microsoft strategy was announced, the
global smartphone market has grown by 2.4 time. Elop promised that his strategy
would take 2 years and he would replace the existing Symbian smartphone sales 1
to 1 by Windows Phone sales. But his strategy has failed so comprehensively,
that Nokia has been shutting down factories and selling them. The total
production ability of smartphones for Nokia is down 29% since Elop took over -
and those were not inefficient old factories, those were highly modern, new
factories of highly automated specialized ability. Now we hear that Huawei, the
world's third largest smartphone maker has moved into Finland to start a new
manufacturing plant there to take over from the skills that Nokia has
abandoned.

By closing its factories, Nokia so expressly admits this strategy has failed,
that it has already shut down 29% of its smartphone production ability from
Nokia's peak in 2010, while since then the global market has more than doubled
in size. And Elop's actions point to how low Nokia thinks its maximum ceiling
now is with Windows Phone - even if all smartphone factories run at full
capacity, Nokia's global production could only manage about 7% of the
smartphone market demand for this year 2013. That is, under 'perfect case'. You
may find that many Nokia analysts are now saying the Windows Phone startegy is
such a comprehensive failure, they expect Nokia smartphone market share this
year to be nearer to something like 2% or 3%..

TWENTY REASONS WHY NOKIA STRATEGY HAS FAILED

When testifying to the US Securites and Exchange Commission via the required
Form 20-F about this radical change to Nokia strategy, Nokia wrote that there
were explicit risks, which "could, either individually or together"
impair öur ability to execute successfully our new strategy."

So some of those 20 items I analyzed in the above might alone derail
Nokia's Windows based strategy, or others might 'together' cause the strategy
to fail. Now we know. Nokia experienced huge growth in smartphone sales in
2010. The sales turned into decline in 2011 immediately after this strategy was
announced - and the decline has worsened quarter after quarter. Nokia towered
over its rivals in 2010, twice as big as Apple, four times as big as Samsung.
Now Nokia has shrunk to 10th in smartphones with an ever-shrinking share and
might fall out of the Top 10 by Q4 results. Nokia's record-setting growing
profits in the smartphone unit that generated more than 2 Billion dollars of
profits per year have now been replaced by ever worsening losses, Nokia
generated over half a Billion dollars of losses in its smarpthone unit in 2011
and more than 1.4 Billion dollars of losses now in 2012. The operators/carriers
and distributors hate the Windows strategy - Elop himself admits it "of
course" and points out that many carriers/operators refuse to sell Nokia
Windows Phone handsets altogether. The Nokia brand is damaged, the Nokia
ratings agencies hate this direction rating Nokia as junk. The Nokia share
price which had grown 11% in the first five months of Elop's tenure to over
8.20 Euros has collapsed to 3 Euros and Nokia is regularly under take-over
speculation, even as Elop fires tens of thounsands of staff and sells
factories, units, patents, the Nokia Headquarters buiding etc.

The Windows Phone based strategy has failed. Its not me saying so. It is what
Nokia warned when this strategy was unveiled. Nokia filed its Form 20-F which
gives us the failure standards, how do we know if the strategy has failed. It
was not me who wrote those risks into that testimony, it was Nokia. And now
when we examine those points, we find that yes, Nokia's strategy has
comprehensively failed.

Elop must be fired for thrusting profit-making market-dominating Nokia into
this self-destructive path. Elop must be fired for continuing on this ruinous
path even as he saw clearly it cannot succeed (the most obvious evidence being
when smartphone factories are sold or shut down). Elop must be fired for horrid
execution of the plan - witness the total failure of Windows Phone even in the
new Lumia launch now - where Elop 'learns' from his mistakes and after Lumia
first time lost market share and saw collapsing sales, he now raises prices,
reduces distribution, cuts operators (the idiotic "exclusive"
operator-deals which even Apple wanted to get rid of as soon as it could,
stating exclusive deals are not capable of supporting large scale sales) and
limits the portfolio with ever less differentiation. The Lumia Windows Phone
launch year of 2012 was a disaster. Now, with the new steps, Elop is
guaranteeing that the Re-Launch of Lumia for 2013 will be worse still. Why is
the Microsoft Muppet allowed to remain in control of Nokia? His strategy has
failed on 20 counts. He must be fired now!

These were not ' Tomi's petty reasons' to blame Elop. These were 20 risks that Nokia testified in Form 20-F to the USA Securities And Exchanges Commission and New York Stock Exchange last March, that were risks that could destroy the Microsoft strategy announced in February of that year. This form clearly says, that Elop's strategy would take 2 years to complete. On February 11, 2013 we will have 24 months from the start of this strategy. The last Quarterly data for Nokia related to this strategy is coming now in January (fro Q4 of 2011). The Microsoft Windows strategy for Nokia has comprehensively failed, at least on those 20 points, several which alone will destroy the strategy - not my words, so said Nokia.

I will post this long blog now to start the year, for those who may want to reference this and dig for themselves. I will return to some of these topics with some updated diagrams and numbers to explore some of the failures in more detail in the coming days and weeks.

Note, this blog was 100% on risks and problems Nokia identified 2 years ago. Stephen Elop has mismanaged Nokia but he has done far more damage to Nokia, both in smartphones and elsewhere than just these 20 risks that Nokia itself identified. I wrote last summer my 'definitive' piece on the biggest faults of Stephen Elop as CEO. If you want to read another monster-long Tomi Ahonen blog about management failure, and learn the lessons of how Elop through his mismanagement accomplished these risks to come true (and other damage to Nokia), read The Sun Tzu of Nokisoftian Microkia.

Lets do the disclosure part - I am an ex-Nokia employee. I was not fired by Elop haha, I left in 2001, back in the very good days when Nokia was still growing as the giant. In my last job I was at headquarters heading Nokia's global consulting unit which served the major international carrier/operator giants like China Mobile, Vodafone, T-Mobile, Orange, Telenor, etc so I saw not only what Nokia strategy was but I was personally and deeply involved in seeing how the carriers/operators formed their strategies. I have been used by Nokia over the years as their consultant including at various public events from Finland to Pakistan and from Egypt to Colombia. The first of my 12 books was listed as an 'official Nokia book' and sold through the Nokia website. A Nokia President has written the foreword to one of my books. So I am not holding any kind of grudge against Nokia. I have been both supportive of - and very critical of Nokia before Elop came to town. I have been both supportive and critical of Elop based not on any personal vendetta, but on what he has actually done. Clearly being the biggest management failure of all time not just in telecoms or tech, but in any industry, ever, Elop has managed to accomplish more lunacy than any other CEO in a comparable period of time. Hence, most of my writings about Elop over the past two years have been negative, but not all. I was for example very supportive of him and Nokia when the N9 was launched or the 808 Pureview etc.

Note that I consult for the industry, my refernce customers include just about every giant of the industry and I have been equally critical of past giants stumbling in the handset industry such as Palm, Motorola and RIM. I am not here because I somehow hate Elop (or because he slept with my wife, haha, very funny theory someone once suggested) - I am here as an honest expert giving my honest view when a company is making dramatic mistakes. The release of the Burning Platforms memo WAS a huge mistake - I said so here immediately, and Elop himself has admitted it caused damage to Nokia. I was here to say that when Microsoft bought Skype that was good for Microsoft on the desktop but would damage Windows Phone smartphone sales - and again, Elop himself admits now that it is true, that operators hate Skype 'of course' and many refuse to even carry Windows Phone based smartphones. I called Elop for creating an Osborne Effect and a Ratner Effect - I was not alone in either of those observations, now most tech analysts agree that it is what he did. And so forth. I am calling it as I see it, if Elop stopped making colossal mistakes - like now "exclusive" carrier deals which further damage Lumia market success - not my view, that was the industry consensus view when Elop announced it - if Elop stopped making mistakes, I would stop criticizing him. This is not about hating Elop, this is about loving Nokia. I still am an optimist, I love Nokia, and I hope Nokia can somehow survive, shifting quickly to Android or - more likely - that it might be bought by a friendly new owner that the Nokia brand might still survive and mean something. After all, it was Nokia that invented the smartphone and utterly dominated this market until Elop came in to destroy Nokia's leadership position.

On shares. This blog makes no recommendations on any share prices, I do not personally own Nokia shares and I do not allow discussion of share prices and stock markets in the comments.

Why am I obsessing about this story? Because this IS the biggest catastrophy in the mobile industry, and one that keeps evolving, going from bad to worse. This is a bigger disaster than Siemens exit in phones, Motorola's collapse from number 2 handsets, far greater failure than Palm falling from number 2 in smartphones. This is bigger than the damage Toyota saw from its brakes problems and recalls. This is bigger than problems British Airways witnessed with the catastrophy at Terminal 5 opening, or BP saw with the Oil Spill, or Exxon saw with the tanker fiasco of the Exxon Valdez, or Coca Cola experienced when attempting to launch New Coke (and note - Coca Cola wisely brought back Coca Cola Classic alongside its new 'platform'). This IS the biggest story in telecoms and tech. Elop has precided over the biggest management failure of all time, and the most rapid collapse of a global market leader - in any industry, ever. He is the biggest failure CEO ever. He is a loser of a boss. These stories must be chronicled and lessons learned so that the mistakes of Stephen Elop will never be repeated by anyone. His name must be synonymous with comprehensive - self-induced - market destruction. I write this story, because I am an analyst of this industry - and wrote 'the' book on how this industry makes its money. If we are witnessing a world record being made in incompetence in this industry - in how money is lost - then yes, I must write this story or I would not be honest to my craft. And I will continue reporting on Nokia's troubles as long as it continues on this mindless suicidal path, of course.

One plug - if you noticed, I have no ads on this blog, I have written more than two million words over six years on topics relating to mobile, telecoms, tech, media and the internet on this blog. We have had over 3 million visitors and have had over 30,000 comments posted here. Yet note, no ads. We have no registration, we don't harvest your emails, this blog is not for sale. I am here only to share with my loyal readership, many of those people posting comments have been on this blog for years. I am already the most published author of my industry, Forbes rated me the most influential expert in mobile, what more could I want? I have zero interest in anything else except sharing my best insights where I can - and often I have been wrong - and I am the first to announce here on this blog whenever I am wrong (how many 'mobile experts' bother to do that?). I've spoken at over 350 public conferences to a cumulative audience of over 100,000 in over 60 countries on all six inhabited continents. I have over 500 press references. What more could I want? I am not writing this to 'try to get visibility' haha, everyone in my industry knows me, most major CEOs in this industry have autographed copies of my books in their bookshelves. I do this only for my readers. I only share my thoughts with my readers out of a passion for sharing. But in my day job I am a consultant and author - I am the most published author in the mobile industry and my books are already referenced in over 120 books by my peers - a truly phenomenal achievement considering my first book is less than 11 years old. So for anyone who needs to understand the mobile handset industry and business, please see my TomiAhonen Phone Book 2012 for the latest industry data and stats.

December 07, 2012

Android Won. Windows Lost. Now what? We have passed the tipping point now, the balance has tipped and can't be flipped. The Platform of the Century will power cameras, credit cards, cellphones, computers, consoles, clocks - and collect consumer insights on our consumption..
Ok. The numbers for Q3 are in, inwhat I anticipated to be the "smartphone bloodbath" three years ago, that would last long into this new decade. That was then, when the battle was joined, and since have called and the battle of the century, the battle for the pocket, the battle for the platform to control the digital destiny of humanity.. that battle, the biggest race of all time - has been won. Already? But we barely got to know you? Yes.

Well, at one level, the platform level definitely, the winner is Google with Android.
The future of computing, the future of the internet, the future of music, of gaming, of television, of newsmedia, of banking and credit cards and even cash itself. The platform that will be in our cars, soon in our clothes and eventually embedded within humans - all that will be owned and controlled by Google, as an evolution of what we now know 'only' as the smartphone platform, Android. Wow. So this is my first blog after Google achieved its victory, to examine these thoughts, what does that mean for humanity, for business and tech, for media and marketing and advertising.

THE ENVELOPE, PLEASE

So lets do the math first. What do I mean? Yes, now the margin of victory is beyond any dispute, Google's Android is currently selling so much more, in new digital devices, than any other open or closed platform in the world, that Google is the winner. Far far more than Xbox or Wii gaming consoles. Way more than other smartphone platforms like Blackberry or the iPhone even if you toss in all iPods and iPads into the mix. Even more than all Windows based devices currently sold from desktops to laptops to smartphones to tablets. Even the proprietary Nokia featurephone platfrom, S40, has now been passed by Android in selling more per quarter. Android powers 71% of all new smartphones sold. In Q3 they sold a staggering 121 million new units or 1.3 million new devices every single day, Saturdays and Sundays included. And Android keeps growing. Android grew sales 18% - not in a year, in just one quarter!. For the Christmas Quarter, Q4, expect total Android unit sales (including tablets) to easily pass 50 million - per MONTH. That rate is almost twice what all traditional PCs, desktops and laptops - the domain of Microsoft's past glory, Windows - manages to sell, and Windows does not power all PCs anymore, not even close.

The smartphone wars are the most heavily contested global industry of all time. More global giant Fortune 500 sized companies are in this race than in any other industry, ever. The world's largest consumer electronics company, Sony is in the game. The world's biggest basic cellphone maker, Nokia is in of course. The world's biggest technology company, Samsung is in. The largest computer manufacturer by one count, Lenovo, is in the race as a new entrant. And the world's largest computer manufacturer by the other count, Hewlett Packard was one of the pioneers of smartphones. The world's most profitable company got that way, by selling a smartphone we know and love as the iPhone. Just two short decades ago Apple the then-PC maker was on the brink of bankruptcy. The biggest mobile phone operator/carrier group, Vodafone sells some of its own-branded smartphones in some markets too. The world's largest software company, Microsoft is in the race on the software side, and is approaching the race on the hardware side too, already making its own tablet PC and is rumored to soon launch its own smartphone too. Almost any major tech or consumer electronics brand you can think of is in the smartphone races from Panasonic to Sharp, from Alcatel to LG, from Dell to Fujitsu, from Acer to Toshiba.

And then look at Android. Of the Top 10 largest smartphone manufacturers of the world, Android powers number 9. It powers number 8. And it powers number 6. And number 5, number 4, number 3 and number 1. Of the Top 10 biggest smartphone maker in the world, only three manufacturers do not supply Android based smartphones, and none of those other three use each others' operating systems either. This is sheer dominance. This is like Gulliver and the Lilliputs. Android is the only giant around with the tiny people.

NEXT MILESTONES

The Android world is so new, that their installed base is still 'modest' by mobile phone standards, altough they are already by far the biggest smartphone platform by installed base. At the end of Q3 there are 559 million Android powered smartphones in use, plus several dozen million more in tablets. In round terms, lets call it 600 million Android devices of any kind, in use. That is nearly twice what Apple has in the iOS ecosystem of iPhones, iPads and iPod Touch devices. It is about three times more than Nokia's shrinking Symbian ecosystem and five times bigger than RIM's Blackberry ecosystem of its smartphones and tablets.

But looking at the next milestones now in December 2012, in passing the next digital platform rivals, Android has still a way to go. The next rival is Microsoft's 1.25 Billion Windows devices in use, across personal computers, servers, tablets and smartphones. So yes, Android devices already sell twice the level of all Windows based devices, but Microsoft's installed base was built over three decades, Android has been arnoud barely more than one fifth that. So Android is selling more than Windows - and the gap is growing not shrinking - so when will Android pass Windows in installed base?

But that moment is coming sooner than you might believe. When will Google's Android power more digital devices in use than all Microsoft Windows gadgets, combined? This time next year! When the data comes in for Q3, 2013, Android will have a larger total ecosystem of devices in use powered by that operating system, than all Windows devices globally in use. Yes, this includes best case for Windows 8 and Windows Phone 8. We have seen the emperor fall. Watch this moment, it is rare for us to witness such a giant fall as what used to be Microsoft in the tech space. Its fall has started, it is now accelerating, and the CEO in charge, Steve Ballmer, is clearly struggling to keep his faculties and is acting ever more erratically, trying to keep the pieces together.

Then. Just one quarter later, by the end of next year, 2013, there will be more simply Android-powered smartphones alone, forget the tablets and other devices, than all Microsoft powered Windows based devices in use, across all Windows versions. Wow. That is fast. No wonder Microsoft is panicking about how their smartphone strategy imploded with Nokia. Yes, the era of Microsoft powering most computing devices is ending - next year. Some of us thought we'd never live to see that day haha.. Windows will be relegated to only being a desktop based obsolescent computing platform, eventually thought of in a similar way as we might think of Cobol, Fortran and Pascal on mainframe computers today. (hey, don't laugh, I learned to program that way in 1983!)

MOST WIDELY USED TECHNOLOGY BRAND OF PLANET

Then by the first quarter of 2014 - only 16 months from now - Google's last historic rival will be overcome, the peak of human adoption of any one digital technology brand - Nokia's peak global adoption level when it was in the pockets of 20% of the planet about a year ago. Yes, by Q1 of 2014 Google will be used by more than one in five humans and their global device installed base will be past 1.5 Billion globally.

And that won't be the end, by this time year 2014, Google's Android will power literally half of all mobile phone handsets sold - when about two out of every three new handsets sold will be a smartphone, and most of those will be Androids. And then by Q4 of 2014, Android will reach another incredible milestone, it will be (mathematically) in the pockets of one out of every four humans alive. Yes, Android's market share of humankind will be 26% by Q4 of 2014. That is a mathematical calculated average, in reality, many of us will have several Android gadgets like two smartphones and a tablet, and thus the real reach of Android won't be one quarter of humanity, but it will be unprecedented nonetheless and enormous.

Android will breach the rarefied Billion user club in just six months from today, by June of 2013. A Billion users? Only a handful of brands have ever reached that lofty level. Facebook, Skype, Windows, Nokia, Coca Cola, Visa and Mastercard. And by 2015 Android will join the truly exclusive club of 2 Billion users, doubling that club's size from 1 to 2, joining Visa, which just this year hit the 2 Billion active Visa credit card level. It took the Visa brand 32 years to hit 2 Billion cards in use. Google will achieve that level with Android in 7 years from launch in 2008. And the frightening part? Google will breach the 3 Billion user level in only .. one further year! Yes by the end of 2016 Android will be in the exclusive altitude of 3 Billion concurrent active devices in use of the technology and the Google brand.

No wonder Visa is already saying the future of payments is mobile money, on mobile phones. They saw this scenario developing. And did Google anticipate it? Google wrote in Harvard Business Review last year that their number two priority is.. mobile money. You know those famous Visa TV ads 'they don't take American Express' - that day may come soon, when Google runs its ads as 'they don't take Visa'. Don't laugh, 40% of the total Kenyan economy already goes through mobile phone payments. Turkey was the first country to set a date for when they end the manufacturing of coins and banknotes - 2025 - to be replaced by mobile money. Coins were invented in the region we think of as Turkey today, 2,600 years ago. Yes, you and I will live to see the end of cash being manufactured as a monetary instrument (no doubt, some commemorative coins will still be made, for collectors). In Norway and Estonia you can submit your whole tax return by SMS text message and Estonia has already run national elections where the citizens were allowed to vote via their mobile phones.

Your mobile phone number is the nearest thing to a global identity number, it is truly unique, where social security numbers and passport numbers are at best, unique to a given country. Very soon your driver's licence, passport and other identity will be on your smartphone.

CENTER OF CONVERGENCE

I've been writing about digital convergence in all of my 12 books. I've gradually expanded the reach of industries which will find most if not all of the given industry migrating to digital, and that the smartphone is at the epicenter of that convergence. We see it today, from our cameras to our wristwatches and alarm clocks to our web browsers, music players, gaming (Angry Birds, anyone?). The mobile is becoming the primary newsmedia channel, the primary entertainment platform and increasingly even retail, commerce, travel, banking, insurance etc are going onto our pockets, or derive a major part of their consumer interaction through our smartphone.

What does it mean, when Carrefour the giant French retailer now drives its retail consumers to the correct aisles in its stores, based on the smartphone app that is the shopping guide? What does it mean, when Finnair counts how many empty seats it has on a given flight, and then sends upgrade offers to its frequent fliers - as they are processed through security onto the airport? What does it mean to Clarion Hotels chain when they already offer for example in Sweden the chance for travellers to use their phone as the key to the hotel room? No plastic hotel keys needed anymore. And what does it mean to Visa in South Korea, when they automatically enable your brand new Visa credit to your phone, but they then ask 'do you want a free plastic Visa card mailed to your home address?' Why would they ask that? Because in South Korea today, nobody uses the old plastic credit cards anymore, every merchant who takes credit cards, has mobile payments already enabled.

Google through Android will be involved in all of our digital activities, in all our lives, as obviously central to it, as Windows had been on our PCs for the past two decades. No matter what else you did, that Windows basic set of tools and apps - remember the annoying paperclip-guy who was Microsoft's virtual 'Help' guy at one point? If you can imagine that world, but expanded ten-fold, no, hundred-fold, in the digital future of this decade, replace Windows in that metaphor with Android, and you see Google will be literally in every one of our lives, and in all our digital activities.

And Google isn't standing still on this. Not like Microsoft, which tended to follow, let others build a future, and then try to bully its way into it - winning some (WordPerfect? Lotus 1-2-3? Novell Netware) but losing others (Chrome and Firefox. Google search. iTunes). Google instead is taking a leading position. Like look at its bold way of pursuing Google Glass and Google Goggles, the Augmented Reality (AR) future for digital. What I now am calling the 8th Mass Media (following Mobile which was the 7th obviously). Google has won the battle for the 6th mass media (internet). It has just now been declared the winner of the 7th mass media (mobile) and Google is trailblazing its way to own also the 8th mass media, which only has a couple of million pioneering media customers in some of the most advanced markets today, like Japan, South Korea, Netherlands and Sweden. But Google is there already.

THE TRUTH IS IN OUR POCKET

We look at our mobile phone 150 times per day, said T-Mobile USA earlier this year. For smartphone users its already 200 times per day according to UK measurements reported in the Guardian. Like I have been saying for years now, its the first thing we see when we wake up, and the last thing we look at before we fall asleep. Yes, most of us sleep with the phone in bed with us and use it as our alarm clock. The mobile phone is our memory bank, it is our calendar, our address book, our messaging center. A study by Vodafone of its New Zealand customers found that more than a third of New Zealanders had resolved a bet or argument by going to their pocket, by searching the answer via the mobile internet. It is the ultimate truth machine. The truth is in our pocket! And who sits at ground zero of that search? Google of course.

Android will power most cameras. Not all, but by far the biggest part of all cameras in use (as cameraphones, obviously). Android will power most videocameras used by consumers. Android will power most 'watches' and clocks and alarm clocks in use (again, only through the clock face on our smartphone screen). Android will power most web browers and 'computers' used by consumers. Not all, there will be an ever diminshing - but not vanishing - segment of 'professional' computers with keyboards and mouse inputs and full peripherals that professionals use. But consumers will use tablets and smartphones, and while Apple will have a nice healthy slice of that business, and some rivals may hold other pieces, Android will dominate that. Android will power our calendars, our music players, our video players, our gaming consoles, and so forth. Soon Google launches its first Google Goggles, the eyeware with the inbuilt cameras and tiny projection screens viewable by the person wearing the glasses. All that - powered by Android, of course. Think of it as a specialized smartphone form factor, built in the shape of eyeglasses. There already exist wristwatches that are in effect smartphones (not very popular by the way). The smart technology is invading our clothing too.

THE POWER OF THE DATA

We just saw the US election, how the Democratic party used the power of deep voter data and insights to run circles around the Republicans, winning the Presidency, winning several 'hopeless' Senate seats, and even taking several seats in the Congress. A victory 'sweep'. And powered by superior insights of consumer ie voter data. It was as I wrote, Orca vs Narwhal.

What of Amazon? Amazon knows that I love my James Bond and I am into mobile telecoms and Formula 1 racing, based on what I buy. Imagine how much more powerful Amazon's search engine - and its recommendation engine - would be, if Amazon also knew which retail shop I go to, what airline I fly, what credit card(s) I use and what hotel I am staying in right now? Have a guess who knows - or will know soon. The company whose operating system powers the gadget in my pocket. Google will know soon, through Android, just about everything one could ever hope to find out, about anyone.

Alan Moore coined the phrase that social media intelligence is the new black gold of the 21st century. Just like how the Klondike and gold miners were (sometimes) able to strike it rich by disovering gold (or silver). That was mostly in the 19th century. Then in the 20th century, the 'black gold' was that liquid gold they started to discover in Pennsylvania and Texas and Saudi Arabia. Oil. Today most of the biggest companies on the Fortune 500 are oil companies (or companies that build devices that run on oil - cars). Now, Alan argues, for this new 21st century the 'new black gold' is that data we extract from our phones and other digital devices about consumer behavior - and its most lucrative part is the 'social media' part of the insights.

COMMUNITIES DOMINATE..

The recommendations! What do we talk about and with whom - haha, not unlike how the Obama campaign used SMS text messaging on election day, asking registered Obama supporters, would they be willing to make one call to another Obama supporter who had not voted yet, to encourage them to go vote for Obama. And how the Obama campaign used Facebook apps to have Obama Facebook friends spread the Obama message to likely Obama supporters - 600,000 Obama voters did that, the average reach was 8 people, so Obama's reach in Facebook expanded by 5 million beyond what Obama had achieved up to that point. Of those 5 million, 1.1 million turned out to register to vote for Obama.

There was no way through television or robocalls or home mailers or emails or even Twitter and Facebook friends, for Obama to find those 1.1 million new voters. They were found by Obama's friends on Facebook, doing the targeted marketing for Team Obama, to find new supporters. This is what Alan wrote about with social media intelligence - the new black gold. Not just to make us rich - also to help us win our elections or help in whatever causes you have from education to healing the planet.

What power does this give Google? I don't mean anything creepy in spying into what we do. I suggest you read Tony Fish's book My Digital Footprint and follow his guidelines very closely. Certainly yes, that power will also be there to spy on consumers - but just think about Amazon. We often go to Amazon just to search something - to see what else Amazon recommends. We are quite literally accessing Amazon 'just to see ads'. To see Amazon recommendations. And how often have you done this? When Amazon recommends a book or DVD for you, and asks 'would you like to see more recommendations' you click on 'yes'. Of course we do! We love Amazon advertising so much - we do literally ask for more ads.

Its the magic that Blyk was able to exploit in its telecoms and media models that we see from Alcatel-Lucent's Optism system to OutThere Media. It is seen in innovative companies now, like Qustodian are doing in Spain and the UK. Making advertising so targeted, personal, useful and beloved - that we do literally ask for more ads! And then imagine all that insight and all that power, and multiply it by infinity (ok, not infinity but as close to it that it won't matter). When Google decides to take full advantage of Android - and Google's other assets from search to YouTube to what will soon be known as something like Google Money - it will make Amazon's recommendation engine seem as advanced as reading the Yellow Pages. If you hate the very idea of seeing ads on your phone and think this future scenario is unbearable, I urge you to read Kim Dushinksi's brilliant Mobile Marketing Handbook (2nd edition) and her Ten Commandments of Mobile Marketing. If companies follow those rules, the advertising on mobile will not be creepy or annoying or interruptive. They will be beloved.

We already rely on Google search to find us anything! That search is only becoming faster and more relevant and more personal and more urgent on mobile, as Peggy Anne Salz has been reporting at M Search Groove and in her books. And we are learning to do that instantly, through our smartphone, rather than waiting to get home to our PC. Now imagine if we program some clever logic into it - imagine Siri a few generations later, when it also handles our money, knows what is on our calendar, knows what we like to do, etc. It will start to make suggestions to us, and again, not in a creepy way of spying on us, but in ways just like Amazon does with our book and DVD purchases. It will for example tell us, that since we usually take the train home at 5 PM, now is the time to go if you want to make it to the train, or the next train is at 5:20, or are you intending to work late and should I order a taxi for 7 so you can make it home in time to watch the live game on TV tonight?

That would seem like the perfect secretary, the perfect assistant, the perfect butler and perfect consierge, all rolled into one. Incidentially, that is what the worlds's most advanced mobile operator/carrier, in the most advanced mobile market, Japan, NTT DoCoMo has found, when it evolved its mobile wallet, Osaifu Keitai, into its latest iteration, called iConsierge. Consumers say its the best service they have ever experienced, and it feels like the mobile phone is reading their minds. They cannot imagine life without it.

Like with most tech, the early iterations will be 'proprietary' models, so we'll find a mobile wallet by a carrier/operator like NTT DoCoMo or another by a handset maker like Nokia Money was in India, or a third by a digital money player like Paypal or a fourth by a traditional bank or a fifth by a credit card company etc. But then the platforms win out and if Google is already working on Google Money and Android sits in the pockets of one out ten humans by the end of this year, one out of six humans by this time next year and one out of four by the end of 2014, of course they will become one of the biggest money platforms - if not the biggest. And then - imagine how much more powerful would Amazon be, if 'Amazon Dollars' were also used at Ebay and Ikea and McDonalds... But soon Google will handle our payments and who knows, we migth see G-dollars some day too, no doubt instantly convertible across all real currencies and also most virtual currencies, much how Google Translate helped us instantly understand any written language today.

ADVOCURRENCY

Google started off doing search better than anyone else without worrying exactly how to 'monetize' it. They eventually discovered a highly lucrative commercial model, by providing advertisements alongside search, and the sponsored search. With that, they became the biggest advertising platform on the newest media - and one which today is bigger than cinema, recordings and radio. Soon internet advertising will be bigger than print and eventually it will be bigger than TV ads. And Google utterly dominates this massive media opportunity. Google's roots are in search and its data, and monetizing through advertising.

Whatever Google may do with Android and maps and videos and money, you can be sure its Google, it will include understanding data, search, consumer user data, and advertising. Which brings me to Jonathan JMac MacDonald's concept of Advocurrency. Jonathan argued that when advertising and money (currency) merge through mobile, there will be a bonus benefit from 'advocacy' hence Adv(ertising) plus (adv) o (cacy) plus currency equals Advocurrency. A kind of evolution of advertising that includes some form of money - not unlike coupons were advertising and money in the past - but which now incorporates social media insights. Is my Twitter recommendation with 11,000 followers the same as someone else's who has 100 followers? And even more, Jonathan argues, that we can influence and manage that value - if I recommend Pepsi this week, then if I try to recommend Coca Cola next week and Red Bull the week thereafter, the value of my recommendation diminishes, regardless of how many followers I have. But if I rarely make recommendations, the value potentially increases, etc.

Now think of it from the side of money. We already have some rudimentary advertising on our currency - usually either ruler worship - the picture of the Queen on the British Pound for exampe - or celebrating history - the pictures of dead presidents on US dollars. Some countries have taken the opportunity to use their currencies as a kind of tourism and travel advertising, showcasing their landmarks and national treasures. Of course the Europeans were so inept at this kind of thinking, they couldn't agree on what European landmarks to use on the Euro banknotes, and decided to create bogus images that are 'representative' of European landmarks without representing anything specifically. How silly is that? Why on earth not use the Eiffel Tower and the Parthenon and the Brandenburg Gate and the Little Mermaid? But I digress. Yes, money has had some advertising for centuries. Now we have the new digital era, when money can have much more.

Digital coupons, digital money, digital recommendations. Group buying. Gamifying our money like becoming the mayor of Starbucks. These all are steps on the road to advocurrency. There are early signs of actual commerce conducted on recommendations as 'currency' and for example Kellogg's opened its first shop in London that lets you have free snacks paid for by sending Tweets via Twitter. That is clearly an early manifestation of advocurrency.

ANDROID OWNS THE FUTURE

Now, think about this. If the future of the internet is indeed mobile. And the future of money is mobile. And the future of advertising will increasingly be on mobile. And the future of social media is, as all major social media brands from Facebook to Twitter already say - on mobile. And mobile enables 'advocurrency' then we will soon see this as a real viable commercial revolution. Then, I can go to Pizza Hut, order a pizza, and pay for it with real dollars, or by having Audi sponsor my meal - through me agreeing to see four Audi ads - not now, but Audi trusts me, and says I need to watch them over the next two weeks - or I can pay for my pizza with my reputation, by doing two Tweets about that Pizza Hut. This will soon be the reality of commerce, in a world of advocurrency.

And someone has to act as the fair arbitrator, on what is the correct 'exchange rate' of one dollar vs one Audi ad to Tomi Ahonen vs one Tomi Ahonen Tweet about Pizza Hut today..That could theoretially be Citibank, banks are good at those exchange rates for example between different currencies. But do you think banks will ever really 'get it' about advocurrency, before its too late? Incidentially, if you can deposit real cash to a bank, and they will pay you interest on it - and then they will lend your money to someone who needs to borrow it, and charge that person interest - will this not also be true of Advocurrency at some point, in some way?

Someone like Visa is more likely to 'get it' but I would rather bet on someone truly gifted at disrupting everyone else's business, like say .. Apple .. or Google. Did I mention, that Google thinks its number 2 global strategic priority is mobile money? And that Android is now the world's most sold digital platform?

Today when we think of the biggest computer platform, that is Windows. If we think of the widest reaching internet advertiser or brand, that is Google. If we think of the bestselling consumer technology, that is now Samsung (was Nokia still at the start of this year). If we think of the biggest credit card, thats Visa. In the near future Google's Android will be far more relevant globally, than any of these. By the end of next year, Google's Android will power half of all new mobile phone handsets sold - not just the smartphone 'segment' but half of all new handsets sold.

MICROSOFT (BALLMER) THREW IT AWAY

This future belonged to Microsoft. Its Windows platform ruled the desktop and the laptops, the previous era of computing. Microsoft's Bill Gates did see and correctly anticipate the smartphone revolution, partly observing Nokia and Hewlett Packard build it - and Microsoft rushed to join this race a decade ago. They were doing ok, captured one eighth of the market and were clearly the second largest smartphone OS behind Nokia's Symbian

(Hey, hold on. Wanna see irony? Today latest Q3 data and 20 months after Nokia CEO annoucned the premature death of Symbian, in Q3 Symbian sales has collapsed from the 29% market share it had when Elop announced it, to 2% now. Latest data Q3. When Elop announced in February 2011 he would replace Symbian with Windows, Symbian was stil the world's bestselling smartphone OS platform, obviously bigger than Windows. And what did Elop select to replace Symbian? Windows Phone. And still today, after Symbian has shred nearly 11 out of every 12 customers it had, and Symbian is at 2% global market share by latest numbers - Windows Phone market share lags that of Symbian!!!!!!! Elop replaced 'the first ecosystem' with the 'sixth ecosystem' promising the world it would become the 'third ecosystem' haha).

Back to the battle of the century. Bill Gates saw it coming and prepared Microsoft for this next transition to smartphones, yes. But it was his successor, Steve Ballmer who blasted that future away, not just continuing Microsoft's history of bullying its 'partners' and suffocating their business, but by killing migration paths, from Windows Mobile to Windows Phone 6. How did that go, Ballmer? Crashing market share from 12% globally to 4% (both Windows Mobile and Windows Phone combined, peak market share). Smart move, Sherlock.

Then to verify, Ballmer had truly learned his lesson of the wrong way to shift from one platform to the next, with its new partner Nokia having just spent its biggest launch budget ever - three times more than any phone launch of any company in history, globally pushing brand new award-winning Nokia Lumia smartphones on the latest Windows Phone 6.5 OS, what did Ballmer do next, to really screw Nokia, the 'strategic partner'? It announced no migration path to Windows Phone 8. All of Nokia Lumia was instantly Osborned. The Windows total smartphone market share (Windows Phone and what remains of Windows Mobile) was 1.9% in the latest quarter. This is how you destroy a market-dominant position. Textbook. Microsoft had it all, it had all the biggest partners in the game from Hewlett-Packard and Lenovo on PCs (and would have been tablets too) and Nokia and Samsung in smartphones. And Ballmer massacred that by his moronic mismanagement of Microsoft's massive market.

Will Microsoft be a player in the ever-diminshing desktop? For sure. Will it manage to hold on to much of the non-growing laptop market,. probably. Will it become the biggest in tablets, no way. The Surface and Windows 8 tablets will go the way of the Zune. Will Microsoft be able to take third place in smartphones. No way. At some point Ballmer will finally look at the endless money pit that is Windows Phone, and pull the plug like he did with the short-lived Microsoff handset, the Kin. The carriers hate Microsoft Windows Phone, not because it has Skype pre-installed and fully integrated with Microsoft's 1.25 Billion PC world - they don't like that either - but because Skype was a tiny irritant of big damage before Microsoft bought it. Today Skype cannot be killed because Microsoft owns and bankrolls the existential threat to mobile operator/carrier business. Not my words, Nokia's CEO Stephen Elop told Nokia shareholders that carriers don't like Skype 'of course' and many are refusing any sales of Windows Phone handsets because Microsoft owns Skype. Not my words, that is Windows partner Nokia talking to Nokia shareholders via its ex-Microsoft CEO. So for any carrier to support Windows Phone is like deliberately and knowingly drinking poison.

There is no confusion in this matter. Carriers will never, ever, allow Microsoft's Windows Phone to become a significant player in mobile. Never. Ever, ever. Microsoft and Nokia can bribe their ways into a tiny share. They may get 2%, 3% if lucky, even 4% market share. That would be one THIRD better performance than Microsoft the world's largest software maker and Nokia the world's largest handset maker at the time, managed to achieve at the peak of Lumia success, added to by the best that Samsung, HTC and others could do with Windows Phone this year. The peak performance. And I am allowing 33% better performance. And if you have 4% of the global market for smartphones, you are a tiny meaningless shit. Sorry, didn't mean to say that. A tiny meaningless 'niche', you are not 'the third ecosystem' by any stretch of that definition. Sorry, Ballmer, Gates was the brilliant guy who saw this coming. You are the putz who threw the future all away. Gates at least understood that to migrate customers from one platform to another, you build a migration path, as Microsoft did from DOS to Windows nearly 3 decades ago.

And Windows 8 and Windows Phone 8 will not matter one iota in this. The battle for the PC was WON by Microsoft. They now are desperately trying to extend that leadership position to tablets, to truly dismal success, so bad, that Microsoft had to resort to its own Surface tablet. And then a FAR FAR bigger market is the smartphone, where Microsoft was once the second biggest, today they are at 1.9% and falling. Can Windows Phone 8 help Microsoft grow to 2% or even 3%, maybe. That is MEANINGLESS when your software once ruled on 90% of the digital platforms sold on the planet. Windows 8 will help Microsoft extend the PC side of Windows further, it will never become an acceptable platform for smartphones. Mark my words. Never. It will NEVER reach 10% market share in smartphones. NEVER.

Did you notice IDC just announced their latest forecast for Windows Phone to be 11%. Their previous promised 19%. So a massive cut in the IDC forecast in just a six month period - and IDC didn't even bother to tell us why the sudden drop. And what of others. There are many analysts who now say Microsoft and Nokia can only do 3% or even 2% for Windows Phone in 2013. That - my dear readers - is finally in line with my projections haha...

NOKIA (ELOP) THREW IT AWAY

Nokia saw this massive future coming too. Nokia invented the smartphone (with HP) and Nokia dominated the smartphone market utterly. Nokia was the first to claim smartphones as true pocket computers long before Apple's iPhone made that a more widely accepted view. Nokia invented the consumer smartphone and the gaming smartphone, in addition to inventing the corporate/business smartphone years before anyone had seen a Blackberry. Nokia saw the future of advertising on mobile as well as the future of money on mobile - and had major investments on both. Nokia had one of the world's first smartphone app stores for its N-Gage gaming phone and by the time the world was celebrating the iPhone's App Store, Nokia's Ovi quietly grew to become the world's second biggest app store - and the bestselling app store on four of the six inhabited continents including the three with the biggest populations.

Nokia owned the future to smartphones on every front from the hardware to the operating system to the ecosystem, the services and the support systems. Nokia had for example Nokia Money in India, with 12% market share of the rapidly growing mobile money market of the second most populous country - and one where regular banking is not widely used. When Elop announced his new strategy, Nokia dominated the smartphone market more than Toyota or GM has EVER dominated the car market! Nokia was twice as big as Apple in smartphones, four times as big as Samsung when Stephen Elop took over as CEO. Nokia grew MORE than Apple in 2010, so the gap was increasing. Nokia grew unit sale by a world record amount that year, growing revenues, and setting a Nokia record for growing profitability in the firt Quarter Elop was fully in charge. That, my friends, is the definition of utter global world dominance.

The world's most used tech brand was (and still is today) Nokia. Nokia's Symbian powered not just Nokia smarpthones but those of several other manufacturers especially in Japan where the most advanced phones are made. When the big telecoms analyst houses issued their forecasts for smartphone markets in late 2010, into years 2011 and 2012 - they ALL agreed, ALL agreed, (by 'all' I mean EVERY SINGLE ANALYST WHO PUBLISHED A SMARTPHONE FORECAST FOR NOKIA INTO 2012 or beyond. ALL AGREED) that Nokia would continue easily as the biggest smartphone maker till now. Where is Nokia?
Stephen Elop came in as CEO, looked at a growing smartphone market, a growing Nokia smartphone sales unit, growing revenues, growing profits and an industry-leading migration rate from dumbphones to smartphones - yes, in 2010 Nokia's migration rate from dumbphones to smartphones was ahead of the industry average - and decided that was not good enough. And he decided to abandon all that, issue his Elop Effect edicts and destroy Nokia in the process.

Today? Nokia has fallen to 10th biggest smartphone maker by Q3 and may fall out of the Top 10 by now, Christmas Quarter ie Q4. Nokia market share in smartphones was 29% when Elop annoucned his mad Microsoft strategy. In Q3 even as we add what remains of Symbian share, Nokia's global market share had fallen in smartphones to 3.7%. It may be at 3% now in Q4. Elop has destroyed the market for 9 out of every 10 customers Nokia had owned in the smartphone space, in a period of six quarters. This is the world record in destruction of any global market leader, and the only reason Ballmer is not the worst villain in this story, is that his buddy Elop did an even worse job over at Nokia. Stephen Elop is the worst CEO of all time, caused the fastest collapse of a market leader among Global 500 sized companies ever, in any industry! He has set the world record for mismanaging a company. Why is the Microsoft Muppet allowed to remain as CEO, I can not understand. And any investigative journalists out there, please consider this story - it is a Pulitzer Prize in the waiting, the story of how Nokia owned the future and the new CEO willfully threw it all away.

If Elop had let Nokia be. If he had let the three MeeGo devices be sold last year, and allowed Symbian to shift and die slowly as it was intended, over several years, shifting to ever lower-cost devices (for Africa, India and the rest of the Emerging World where the big growth in smartphone market is going to be, and where Symbian was holding between 70% and 90% market share) as MeeGo took the top end, Nokia would now sit on - according to EVERY published analyst in the world - on the world's largest share in smartphones, ahead of Samsung, Apple, Blackberry, HTC etc. If we say conservatively that it would be 25%, Nokia would be selling 180 million smartphones now, at revenues of 36 Billion dollars from his smartphone unit alone and adding at least 4 Billion dollars more to Nokia profits. That is not 'my view' - that was the CONSENSUS view of industry analysts just before Elop annoucned his mad Microsoftian misadventure. Now Nokia sells maybe 5 million smartphones this quarter and last quarter, it made a loss of 49% PER SMARTPHONE !!!

So Nokia gets big press for its Augmented Reality 'city lens' on the latest Lumia. Sounds nice, until you go back nearly four years of Google's Android and look at Layar, the worlds' first Augmented Reality browser, which yes, did just that same city lens type of AR solution - on Google Android smartphones - more than three YEARS ago. Like we used to say jokingly, to see what is coming to the next iPhone, look no further than the Nokia smartphone of 3 years ago, now we apparently also know, what Elop will bring to the Lumias. Look at Android smartphones from three years ago.

BTW if you doubt MeeGo, keep an eye on Jolla and Samsung's Tizen in 2013. That is what Nokia 'owned' and Elop threw away.
So Nokia could have shared this future with Google, as a fair fight, side-by-side. With Android now the biggest OS with maybe half of the world, with MeeGo/Symbian/Meltemi the second ecosystem and Apple's iOS the third. These three would have controlled nearly 90% of the worlds' smartphones. Stephen Elop sat on the guaranteed rocketship ride to being one of the winners of this decade. He threw that away for Nokia. Now instead, Nokia is on the brink of oblivion.

SAMMY SAMMY SAMMY

And we cannot write about Android without mentioning the biggest hardware contributor to Android's astonishingly fast rise to the top. Early Android bestselling smartphones were made by HTC but then along came Sammy. Samsung today has sold nearly half of all Android devices in use worldwide. The biggest thank-you from the Googleplex needs to go to Seoul to Samsung's HQ. But observe what is happening quietly in the battle for the pocket. Samsung launched its own OS even as it made our highly praised Galaxy series Android devices. The first OS was called bada (which still haha, outsells Windows Phone, talk about adding insult to injury, Samsung is also a Windows Phone manufacturer). And when Nokia bailed out of its partnership with Intel, to develop MeeGo into the next smartphone platform, who stepped in? Samsung of course. They refocused and realigned the partnership, its now the Tizen alliance but yes, Samsung and Intel are the core hardware partners.

This is a bit like IBM vs Microsoft in the 1980s if you are old enough to remember. When Apple introduced the Macintosh, Microsoft would develop its Windows OS as the 'Macintosh envy' that Microsoft had. But IBM had differing views of where the PC market needed to go, plus it wanted to break away from its PC dependency on Microsoft (sound familiar, haha) and thus it built its own 'next generation' operating system for PCs, called OS/2. That ran alongside early Windows and later editions of DOS for quite a many years back then. So in a way, Samsung with bada and Tizen today are a bit like IBM was in the 1980s, taking on Microsoft, except that with Samsung, obviously the primary target is not the miniscule Microsoft Windows Phone in smartphones, its Google's Android. So yes, Samsung, the biggest Android handset maker, is preparing to launch a new smartphone operating system for 2013, called Tizen, to go directly against Google's Android. And fair's fair - Google itself bought Motorola and sells Motorola branded smartphone hardware, running Android, against Samsung's Galaxies. Whats good for the goose, is good for the gander.. The lesson that Samsung seems to have learned very well from the IBM OS/2 fiasco is, that Samsung have hardware partners like Intel, they have committed handset manufacturers and they have most importantly - the carrier support already locked up, with major global carriers supporting Tizen from NTT DoCoMo to SK Telecom to Telefonica to Sprint.

Anyway, Samsung is very good at the hardware from handsets to the big plasma screen TVs to many of the components going into iPhones etc.. They are not as well known for the software and services side, but have competences there as well - many hidden as only on services and apps launched in South Korea to it highly evolved dometistic digital market - and have been expanding that competence now globally with the bada ecosystem, which will likely be merged into the Tizen project in the coming months and years. So in some way, when you look at Samsung smartphones, and especially its Tizen part in the next few years, remember you could remove the Samsung logo and were it not for Elop, that would have been (should have been) a Nokia brand there..

As to Android and the iPhone, Tizen is the real Third Ecosystem. Just with Samsung's own smartphone global dominance, if they shift 20% of their total smartphone production by the end of next year to Tizen, Tizen will automatically be the third ecosystem. That is, before ANY of the many hardware vendors have added their handsets to the Tizen mix. I do expect over time Tizen will grow to pass the iPhone iOS to become the second biggest but Android is so far ahead and well entrenched, I don't see Android being toppled, not during this decade at least.

But if you grew up thinking the tech world was governed by the 'Wintel' alliance of Windows and Intel - the new tech standard is Samgle, or Samsoogle, Samsung and Google (or Googsung). The biggest tech company of the planet (Samsung) and the biggest internet company and biggest advertising company, that owns the biggest-selling software platform (Google). And the biggest loser pairing is Nokisoft, that is ever shrinking to be the Microkia.

ANDROID RULES

So yes, if you're in advertising you love your Macs, iPads and the iPhone. Of course you believe the Apple cool-aid that the future belongs to the iOS. And you prepare your award-winning iPhone apps and show them on your iGadgets to your friends and colleagues.

But for all others in the tech industry, the digital world now starts with - and often even ends at - Android. Get your competence there. If you do apps, make sure you do Android apps. If you do advertising, check out Google advertising services. If you do search, you know what I mean... Google is now the new epicenter of the digital convergence space. Windows is dead (Nokia also is dead). The King is dead, Long Live the King. Android is the new King of Digital. Congratulations Google. You said the future of the internet was mobile, and only by being able to successfully transition into that future, can you remain relevant into this new decade. You did it. Android is the winner now, unstoppable.

50 million new Android devices sold per month, today. Wow.

ONE PLUG

What is your strategy in mobile? How will Android play in that strategy? Are you going to be partnering with Google on that path, or competing against it? How can you capitalize on the biggest economic opportunity in our lifetimes? Did you notice that the most profitable company - and the most valuable company - on the planet, is a former 'computer' company which now calls itself a 'mobile' company? Apple. And the wealthiest man on the planet no longer comes from the computer industry, Bill Gates has been supplanted on the top by Carlos Slim, a mobile industry tycoon. This is your life and your career whether you wanted it or not. And if Google's Android will shortly be in one out of every four pockets on the planet, you will not be able to avoid Android on your career path.

So what does that future look like? What is the digital landscape in 2014 or 2015? Check out the TomiAhonen Mobile Forecat 2012-2015 to see the future through the eyes of the most accurate forecaster in the mobile industry.

August 09, 2012

The ultimate number in technology is upon us. Within months, literally, only months now, we will reach the point in time that there are more active mobile phone connections on the planet than human beings alive. Not 100% penetration 'by households' or 'by adults'. No. I mean 100% mobile penetration per capita. By humans alive. Counting literally everyone from babies to great grandparents.

This is totally, comprehensively unprecedented in the human history of technology. No tech ever, no tech, has even come close. Not television sets, not Playstations, not PCs, not Walkmans, not radios, not cars, not motorcycles, not even bicycles; not credit cards, not even bank accountsl; not books in print, not newspaper circulations; not the reach of electricity or landline telephones or even running water; not wristwatches, not toothbrushes, not even pens and pencils.. have been as widely used as mobile is today. And now comes the ultimate milestone. The first time ever, there will be a consumer technology that exceeds the whole human population by its size.

This is the big picture. This is the biggest story there ever was in any technology, ever. The most widely reaching technology ever - by a massive margin by now - and what is more, mobile is not just a telecommunication tool, it is also a digital, interactive mass media channel. It is also a payment channel. And it is the ultimate technology cannibal.

This is your primer to understanding the most radical, utterly disruptive technology there ever was, and what it is doing now, and where it is headed next. This is a long blog, so set yourself some time. But if you are in telecoms, or media, or advertising, or the financial industry, or in travel, or retail, or education, or healthcare, or well, almost any industry from farming to fishing to forestry to funerals - mobile will change your life. This is your guide to your digital future. Do grab a cup of coffee and follow me after the break here to an adventure into the electronic eldorado, the digital klondyke that we call mobile. We are about to pass the Mobile Moment. That point in time, where humans for the first time ever, found a consumer technology that had grown larger than the total human population itself.

June 12, 2012

Lets talk print today. The print media has been under quite heavy assault for many years now from the internet and mobile. Some take cover in doing their print titles on new digital platforms like custom editions for the iPad for example, or a smartphone version etc. Other print titles have resorted to far simpler versions from SMS news alerts and mobile web versions to having custom Twitter feeds etc. Yeah, all that is good, in terms of exploring the digital world. But that is not the future of print.

Don't misunderstand me, there is huge growth to be had in doing news online or on mobile and/or on tablet PCs wherever you categorize those devices. I mean print, print as in 1st mass media print. Books, newspapers, magazines and billboards, catalogs, brochures. Paper. Print. And I don't mean some kind of Sci Fi paper with some electronic threads or paper-like thin displays. I mean pulp, from a tree, via a sawmill. Paper. Print. A printing press. I want to talk about the future of the 1st mass media today.

Oh, for new visitors, just one refresher course if you haven't caught up with the latest writing. The 8 mass media are in chronological order:

1st Mass Medium: Print from the 1500s2nd Mass Mediun: Recordings from late 1800s3rd Mass Medium: Cinema from about 19004th Mass Medium: Radio from the 1920s5th Mass Medium: Television from the 1950s6th Mass Medium: Internet form the 1990s7th Mass Medium: Mobile from the 2000s8th Mass Medium: Augmented Reality from the 2010s

PRINT IS NOT GONNA DIE, GET OVER IT

There is always panic with old media when a new media channel comes along. When radio appeared, there were huge fights with the recording industry about who was stealing whose content and many experts thought that free music on radio would kill the recordings industry. Well? We are now 90 years into that experiment, I think its safe to say that Lady Gaga and 50 Cent can sleep safely that their recording industry is still alive. Yes, its had its ups and downs but its not going away.

There were lots of media experts who suggested that when those darnfangeled television sets would come to every home, it would surely kill the cinema industry. That hypothesis has now had 60 years and as far as I can see, there is a new James Bond adventure coming with 007 Skyfall and I will surely stand in line for the ticket. No city I know of has closed all its multiplex screens yet.

The lesson we get from cinema and TV, is that TV did use all cinema content ever made, but that was not enough. TV needed more, and created its own content and formats that will not even work on cinema - consider music videos like on MTV or gameshows and reality TV. Those work excellently on TV but are not viable in the movies. What cinema also found, was that some formats were not competitive against television. Newsreels. Did you know that in the 1930s and 1940s it was very normal to go to the movies and see short news films from around the world about major events. Remember nobody had TVs at home, this was like watching the TV news. The sporting results from the Olympics or a royal wedding or the news from the second world war. Those 'newsreels' became obsolete when television news would reach the majority of homes in the late 1950s and early 1960s.

Radio the 4th mass medium did not kill Recordings the 2nd mass medium. Television the 5th mass medium did not kill Cinema the 3rd mass medium. And no, the Internet 6th mass medium nor Mobile the 7th mass medium will not kill Print the 1st mass medium. But just like how Cinema had to adjust to TV, so too will Print have to adjust to the Internet and Mobile (and Augmented Reality).

THE DEADWOOD FORMATS

Some formats of print are totally obsolete and deserved to die. When there was no other way, the Yellow Pages and White Pages phone books were a valid way to let people know who had telephones, what were their telephone numbers, etc. The Yellow Pages were a 'better than nothing' way to find out who was a locksmith or dentist or attorney. Today Google does all that for us. An Encyclopedia was often a sign of an enlightened, learned, civilized family. It was the first place you went to seek information. Today we go to Google or Wikipedia for that info. These were large heavy print titles, formats, that served a need when there was no better way to deliver the information. They are long gone by now - and good riddance! How many trees died needlessly in the last decade in never-opened editions of published Yellow Pages and White Pages and various Encyclopedia and Dictionaries and Thesauruses etc.

This is like Newsreels were in Cinema. They served a purpose once, but were not the best use of that medium, and certainly were inferior in delivering their intended content to their audience. Like listening to live sports on Radio. If we do have live TV coverage, that is what we prefer, even as some radio announcers were brilliant radio personalities haha.. But then Radio would adjust and invent new formats like say Drive Time radio which you can't do on TV. Or in the case of Cinema, they stopped most low-budget 'Serials' movies and shifted upstream to higher budget features with superstar actors like your George Clooneys and Angelina Jolies etc. TV can do great drama like in Mad Men but its no James Bond epic haha..

SO HOW IS PRINT DOING DIGITAL THEN?

So this is not 'repurposing' your content to other media - like showing a rerun of James Bond on a Saturday on TV. I am not talking about taking your magazine or newspaper and creating a digital edition of the page to the iPod or internet or mobile. No. I mean lets turn the traditional printed page into a fully digital, interactive mass media experience. Lets help the First Mass Medium with the some digital love by the Eighth Mass Medium - yes, Augmented Reality.

And how do we do this? You know the QR code obviously (2D Barcode). It lets any printed page like a printed advertisement or the label on a can of Pepsi or a business card or airline boarding pass, to be able to be read by cameraphones and then various actions can be programmed into the QR code. It can include a web link for example.

Now take that one step further. The QR code is a standardized and usually relatively small, about postage-stamp sized square of black and white dots. Now what if you had the intellect to detect a more advanced image? Like a specific page of a magazine (one with a couple of pictures for example). The intelligence would be smart enough not to be triggered just by seeing one of those pictures, they have to be in the correct layout, in the correct relative sizes, and there needs to be the right pattern of text on that page too. The detail and unique abilities to personalize the page is nearly infinite, far far more than what is ever possible in traditional QR codes.

This is not science fiction. This existed in the laboratory for a few years and has been turned commercial earlier this year, led by our friends Layar of the Netherlands, the AR people. They now have in their commercially launched products, the technology to allow any printed page with illustrations (so not just text) including diagrams, pictures, graphics - and that can be tagged as the identifier for digital content. After that, we get magic. Consider this (this is not done by Layar's solution, this is an earlier technology as a one-off for this magazine advertisement), one of my fave examples of some teenager-boy aged marketing from the UK by the deodorant brand Axe/Lynx. The printed page does not show the girl fully, but take out your phone, and you can see her:

This is just one very early and simple version of what we can do with AR on a print magazine. The paper in this magazine is nothing special, just a normal printed magazine. In this case the Lynx/Axe app needs to be installed to a suitable smartphone and then look at the picture..

Beyond this, we can do just about anything digital. We can add voices and sounds. We can add videos and animation. We can show before and after images. We can show work in progress. In the Netherlands there is for example a comic book which is AR enabled. One of the features is that fans of the comic can see the same exact comic book page in draft form, how it was before the artist finished the frames. Perhaps the person was looking in another direction in the earlier draft, etc..

What do you need to read it? A smartphone with the Layar app. Layar launched 2 years ago out of the Netherlands and has reached 19 million installs and has 3 million active users worldwide. I estimated last month, that their Netherlands user base is about 1.5 million which is about 8% of the total population of that country. If we take it as a percentage of Dutch smartphone owners, its past 15%. That is not a niche market, my dear reader. That is the start of the Mass Market. Yes, AR is a Mass Media now, not just a tech nerdy niche geeky thingy.

LET ME TELL YOU ABOUT MAGALOGUE.

So yeah. I was in Amsterdam last month and visited with the Layar offices and saw some of the cool stuff they are doing. I also met with the digital people over at vtwonen, the biggest interior decoration magazine of the Netherlands. So this is your typical magazine about interior decoration ideas, your lamps, curtains, kitchens, furniture, etc..They showed their first ever Magalogue that was an insert to their regularly published vtwonen print issue this March. What is a magalogue? Magazine + Catalogue = Magalogue.

A magazine tells stories, usually with plenty of pictures. A catalogue is very different. Think Ikea, or Sears. A catalogue is intended to sell. So the catalogue has to give pertinent information to help you decide about buying. In the case of furniture, for example, it has to tell you not only how much it costs, but its dimensions. Does that bookcase fit in your living room? And it has to tell you about colors and fabrics and materials used. Often with various furnishings there are variations or options etc. A sofa may be in four-seater and 3-seater and 2-seater. Plus easy-chair, sleeper-chair and ottoman. Etc. To cram that type of info in a catalog takes a lot of text and 'wastes' paper. The catalogue becomes heavy. And then it gets also cumbersome. The similar items need to be near each other. We don't look for our bed choices from several pictures of bedrooms. We want to see the beds only, next to each other, all in a series of pages with only beds. This is not good for telling stories. Its the 'phone book' version of a spy thriller book haha.. You either have one (a magazine with stories, but not room to do the catalogue selling) or the other. But not both.

Until now. Enter the Magalogue. vtwonen used their editorial staff to create real interior-decorating type stories and tips, but using specific items that were all for sale (by multiple providers). This is like what if the Ikea catalogue was mixed on 'random play' on an iPod haha, none of the book cases were on the same pages, but rather, each book case was set into a suitable story about an actual room, and an actual interior decoration need. Its like no catalogue I've ever seen. Every page has an actual story, with pictures of a realistic mixture of products for sale. The products are obviously carefully selected in the right colors and shades so they fit together as if selected by an interior design architect (as the writers invariably would be). But the pages are not cluttered with endless columns of tiny text describing every item in detail. Yes, there is a single description of every item (only its name and its price) but all other info is now hidden in the AR app.

If you like the towels on page 18 but wonder if it comes in the shade of blue you prefer over that green in the picture, you take out your phone, look at that page and you'll have the link to that item. Here are the colors, here are the sizes, here are the prices... and here is the link to your shopping basket if you want to buy.

Now we can have tons tons TONS more. We can have experts giving advice on that item. We can have video on how that picture was made and what other items were considered. We can have variations of that same set up with alternate colors, etc etc etc etc etc.

And this is NOT a catalogue! There is not that heavy weight of all those pages of most unncessary pages in the back with all the detail about every item, their shipping weights, sizes, etc. No. We don't need that. Its all in the AR app. The 'catalogue' is removed form the 'logue' and the Magazine is added. Now we have a very nice fresh magazine that happens to be selling every item in the pictures, and you can get more info than ever was possible in any printed catalogue. Magazine + Catalogue = Magalogue. Brilliant idea!

Wait - I forgot the best part - its not static! If you want to make changes to your content, that can be altered at your end (you the publisher). So there is a price change. So there is a new color. Now there is a TV show that mentions that item and some celebrity said its cool. You want that video also in your page. You can make changes to the digital links of a print page already published !!!! It allows you to keep your printed page 'alive' and relevant for much longer, with updated content elements!!!

And coming back from the 1st Mass Media to the 8th. I mentioned that I did my first TED talk at TEDx Mongkok two weeks ago, on the theme of Augmented Reality (and mentioned print media uses too). You may want to see this video, its only 20 minutes but the early reviews are that I got the angle pretty much dead-on about why Augmented Reality is the 8th Mass Media channel, and why it is relevant now in 2012. See Tomi at TEDx Mongkok talking about Augmented Reality as 8th Mass Media.

Available for Consulting and Speakerships

Available for Consulting & Speaking

Tomi Ahonen is a bestselling author whose twelve books on mobile have already been referenced in over 100 books by his peers. Rated the most influential expert in mobile by Forbes in December 2011, Tomi speaks regularly at conferences doing about 20 public speakerships annually. With over 250 public speaking engagements, Tomi been seen by a cumulative audience of over 100,000 people on all six inhabited continents. The former Nokia executive has run a consulting practise on digital convergence, interactive media, engagement marketing, high tech and next generation mobile. Tomi is currently based out of Hong Kong but supports Fortune 500 sized companies across the globe. His reference client list includes Axiata, Bank of America, BBC, BNP Paribas, China Mobile, Emap, Ericsson, Google, Hewlett-Packard, HSBC, IBM, Intel, LG, MTS, Nokia, NTT DoCoMo, Ogilvy, Orange, RIM, Sanomamedia, Telenor, TeliaSonera, Three, Tigo, Vodafone, etc. To see his full bio and his books, visit www.tomiahonen.com Tomi Ahonen lectures at Oxford University's short courses on next generation mobile and digital convergence. Follow him on Twitter as @tomiahonen. Tomi also has a Facebook and Linked In page under his own name. He is available for consulting, speaking engagements and as expert witness, please write to tomi (at) tomiahonen (dot) com

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